April Market Review: Markets Reach Record Highs Amid Ongoing Uncertainty

April serves as a powerful reminder that markets can bounce back strongly even when investors are worried. Despite an ongoing conflict in the Middle East, major market indexes climbed to new all-time highs during the month. The S&P 500 — a widely followed index that tracks 500 large U.S. companies — rose 10.4% in April alone, making it one of the strongest single-month performances in the index's history. In some ways, this echoes the tariff-driven market swings and recovery seen in early 2025.

This does not mean the path forward will be easy. Tensions around the world, a change in leadership at the Federal Reserve (the U.S. central bank that manages interest rates and the money supply), and rising energy prices will likely remain in the news in the months ahead. What April reinforces is that no matter how difficult things may look in the short term, keeping a well-balanced portfolio that matches your long-term financial goals remains the most reliable approach.

Key market and economic highlights from April

• The S&P 500 and Nasdaq gained 10.4% and 15.3% for the month, both ending at new all-time highs, while the Dow Jones Industrial Average rose 7.1%.

• Volatility — a measure of how much markets are swinging up and down — declined over the month, as measured by the CBOE VIX index, falling from 25.3 to 16.9 alongside improving market conditions.

• International developed markets returned 7.0% based on the MSCI EAFE Index in U.S. dollar terms, while emerging markets returned 14.5% based on the MSCI EM Index.

• U.S. small cap stocks jumped 12.2% based on the Russell 2000 and mid-cap stocks gained 7.8% based on the S&P MidCap 400.

• The 10-year Treasury yield ended the month with little change at 4.37%. The Bloomberg U.S. Aggregate Bond Index was flat with only a 0.1% increase during the month.

• Brent crude oil ended April at $114 per barrel, with swings from as low as $92 to as high as $121. WTI closed the month at $105, as the Strait of Hormuz remained closed to shipping.

• Gold ended the month at $4,610 per ounce, a slight decline over the month. The U.S. Dollar Index stood at 98.1, down from 99.96 the previous month.

The stock market bounces back

At first glance, April's strong market gains may seem hard to explain given the ongoing geopolitical tensions and uncertainty around policy. However, history shows that some of the market's best months have come at times when investors were most nervous. This has happened repeatedly — after the pandemic shock in 2020, the inflation-driven market downturn in 2022, and the tariff-related pullback in early 2025. While strong rebounds are never guaranteed, they tend to happen when people least expect them.

Taking into account the negative returns from the first quarter of 2026, the S&P 500 is now up 5.3% for the year so far. The chart shown here illustrates how annual S&P 500 returns have been distributed throughout history. Since 1928, the market has finished the year with gains in roughly two out of every three years. This means that while down years do happen and are perfectly normal, positive years are far more common when you look at longer stretches of time. Since 1980, the share of positive years is even higher — around three out of every four.

This is not meant to suggest that markets always recover quickly. Rather, it highlights how hard it is to predict the right time to enter or exit the market. The events of recent years offer valuable lessons for investors to keep in mind the next time markets become turbulent.

Jerome Powell's last meeting as Fed Chair

The Federal Reserve — the U.S. central bank — kept its key interest rate unchanged at its April meeting, holding it in a range of 3.50% to 3.75%. This decision was largely expected, but there was notable disagreement among committee members. Four of the twelve voting members dissented, meaning they did not fully agree with the decision — the most dissents seen since 1992. Three officials agreed with the rate decision but objected to language in the statement that hinted at future rate cuts. One governor pushed for an immediate rate cut, which has been their position at every meeting they have attended.

This division reflects both a leadership transition at the Fed and two competing economic challenges it must balance. On one hand, the job market has been softening, with the number of available jobs falling below the number of people looking for work for the first time in years. On the other hand, the ongoing conflict involving Iran and the closure of the Strait of Hormuz — a critical waterway for global oil shipments — have pushed oil prices higher, which is feeding through to gasoline prices and broader inflation (the general rise in prices over time).

Normally, supporting the job market would call for lower interest rates, while fighting inflation would call for higher rates. Because these two goals are pulling in opposite directions, market expectations have shifted so that there are now roughly even odds of either a rate cut or a rate hike later this year.

April also marked Jerome Powell's final press conference as Fed Chair. Powell has served in the role since 2018, when he took over from Janet Yellen, and has been a member of the Fed's Board of Governors since 2012. His expected successor is Kevin Warsh, whose nomination has been approved by the Senate Banking Committee. Powell noted at his final press conference that he will remain on the Board of Governors until ongoing legal matters from the Justice Department are resolved, and that he plans to conduct himself in a way that is respectful of the incoming Chair.

While a change in Fed leadership introduces some uncertainty about future policy decisions, it is worth remembering that both markets and the economy have navigated many different Fed Chairs and interest rate environments successfully. A well-diversified portfolio — one spread across many different types of investments — is built to handle this kind of uncertainty.

Rising oil prices and the Strait of Hormuz closure

Oil prices are one of the most direct ways that the conflict in Iran is affecting everyday investors and consumers. Both Brent crude and WTI (two key global benchmarks for oil prices) climbed back toward recent highs in April, as the Strait of Hormuz — a narrow waterway through which a large portion of the world's oil passes — remained effectively closed to shipping. Several false starts around ceasefire talks and peace negotiations caused sharp swings in oil prices throughout the month.

Despite higher oil prices, the stock market performed well. The bigger concern for investors is whether elevated energy costs could begin spreading through the broader economy. This is sometimes called a "second-order effect" — if oil and gasoline prices stay high for a long time, businesses face higher costs for transportation and energy, and they may pass those costs on to consumers in the form of higher prices for goods and services.

That said, some perspective is helpful here. History shows that the impact of oil price spikes on inflation tends to fade once the underlying situation stabilizes. For example, U.S. gasoline prices briefly surpassed $5 per gallon in 2022 but came back down as supply conditions improved, even though the spike was difficult for many household budgets. It is also worth noting that the U.S. is currently the world's largest producer of oil and natural gas, which gives it more protection from global supply disruptions than it had in earlier decades.

This year also highlights the value of holding a broadly diversified portfolio. Technology-focused sectors performed well over the past month, and the energy sector has been a positive contributor to returns this year. Having exposure to a wide range of market sectors continues to be an important part of managing a portfolio through shifting conditions.

The bottom line? The market rebound in April demonstrates that positive swings can occur even during challenging times. A well-constructed portfolio, aligned with your long-term financial goals, is designed precisely to navigate these periods.