The Market That Would Not Quit

The S&P 500 and the Nasdaq Composite closed last week at fresh all-time highs, and nobody who has been watching equities this month should be surprised. The S&P 500 is up more than 9% month to date, while the Nasdaq has surged over 15%. The Dow Jones Industrial Average has added more than 6% in the same stretch, making April one of the strongest months for U.S. equities in recent memory. That kind of recovery is remarkable given the backdrop. The Middle East conflict has rattled energy markets, Brent crude has traded above $100 a barrel for weeks, and inflation data for March came in hotter than expected at 3.3% year over year. Yet equity markets have shrugged off most of the noise, driven higher by a wave of corporate earnings that continue to beat estimates. Of the roughly 140 S&P 500 companies that had reported results through April 24, 82% topped expectations, according to FactSet data. Total earnings for that group rose 23.1% compared to the same period last year on 9.6% higher revenues, with 76.8% beating both EPS and revenue estimates. That is the kind of earnings momentum that makes it difficult for bears to gain traction, even with oil prices elevated and geopolitical uncertainty running high. This week brings the biggest test yet. Five of the Magnificent Seven, including Meta, Amazon, Alphabet, Microsoft, and Apple, are all scheduled to report. These five companies alone account for roughly a quarter of the total market capitalization of the S&P 500. The stakes, in other words, could hardly be higher. Analysts at Morgan Stanley estimate Magnificent Seven net income will grow 25% in 2026 compared to 11% for the rest of the S&P 493. Whether those expectations hold after this week’s results will go a long way toward defining the second half of the year.