April delivered one of the most remarkable single-month performances equity investors have witnessed in years — a powerful snapback from March's lows that carried major indexes to all-time highs by the final week of the month. In this memo we walk through the key themes that drove the rally, what historical data tells us about periods like this one, and what investors should keep in mind as we head into May.
April Performance Recap
After touching its lows in late March, the stock market staged a recovery that ranks among the strongest calendar-month returns in over five years. The S&P 500 gained approximately 10.5% in April,[1] while small- and mid-cap stocks rose roughly 11% — a sign that the rally was broad-based rather than concentrated in mega-cap names. International equities kept pace, adding 9.5%–10% for the month. Bonds eked out a modest positive return, and cash continued to contribute at prevailing money-market rates. For context the last comparable reading was during the COVID rebound of 2020.
Year-to-date, the S&P 500 now sits up approximately 6%, while small- and mid-cap indexes lead at roughly +13.5% — underscoring the broadening participation that tends to characterize durable bull markets.
What the VIX Was Telling Us
The setup for April's gains was laid in late March, when the CBOE Volatility Index (VIX) climbed above 30 — elevated VIX readings are often accompanied by peak bearish sentiment: surveys showed a preponderance of investors positioned defensively, which may historically function as a contrarian buy signal. When the average investor is loudly bearish, markets typically have a long track record of reversing course.
Historical data shows that when the VIX has exceeded the 28-point threshold, the S&P 500 has delivered median forward returns of approximately 20% over the subsequent 12 months — roughly double the long-run average.[1] By the end of April, the VIX had fallen back near its long-term average, signaling that a meaningful portion of the risk premium built into March's sell-off had been recaptured.
Valuations Reset — Then Recovered
One of the most important developments during the March drawdown was a reset in equity valuations. The S&P 500's price-to-earnings ratio pulled back toward its five-year historical average, and the technology sector — the market's largest by weight — briefly traded below its five-year average multiple. Historically, entry points at or below long-term average valuations typically have been associated with stronger forward returns. The technology sector's subsequent ~20% April gain — roughly double the broader index — reflected that dynamic playing out in real time.
Earnings: The Engine Behind the Rally
Underpinning the equity advance was a resilient corporate earnings picture. Despite the geopolitical backdrop, analyst earnings expectations for the S&P 500 moved higher from the start of the year through early April — a departure from the deteriorating estimates that typically accompany market corrections.[1] The U.S. technology sector led the way, but emerging markets and European equities also saw upward earnings revisions, suggesting that the fundamental case for owning diversified equities remained intact throughout the volatility. Early first-quarter earnings results have continued to support that picture, with beat rates running above historical averages across multiple sectors.
Looking Ahead: Oil, Earnings, and Staying the Course
As we move into May, elevated oil and gas prices remain the primary watch item. WTI crude has risen sharply since the onset of Middle East tensions, and national average gasoline prices have followed suit.[1] A resolution to the Strait of Hormuz situation would be a meaningful economic tailwind; an extended disruption could weigh on consumer spending and corporate input costs. History shows that equity markets have ultimately absorbed energy price shocks, though timelines have varied considerably.
With the VIX near average levels and the S&P 500 at all-time highs, investors should calibrate expectations accordingly: months like April are rare, and near-term returns are unlikely to replicate that pace. That said, the broader backdrop — solid earnings growth, normalizing volatility, and a market that has historically rewarded patience through geopolitical uncertainty — remains constructive for long-term investors.
Our own proprietary risk indicator (50% VIX, 30% High Yield Option Adjusted Spread and 20% S&P 500 % off previous high, percentiles), which aggregates sentiment, volatility percentile, credit spreads, and drawdown depth, moved from an elevated reading of 62 down to 29 as conditions normalized. The ~10% drawdown experienced in Q1 was consistent with a median calendar-year pullback historically — a reminder that some turbulence is a normal feature of equity investing, not an aberration. Portfolios positioned for long-term growth have historically been rewarded for maintaining discipline through exactly these kinds of episodes.
April was a reminder of what the stock market is capable of — and why staying invested matters. We remain committed to keeping you informed and guiding you through every stage of the market cycle. Please don't hesitate to reach out with any questions.
[1]S&P Dow Jones Indices LLC, total return data, April 30, 2026. Small/midcap represented by the S&P MidCap 400 and S&P SmallCap 600 indices.
2CBOE Volatility Index (VIX), historical data. VIX readings above 28 associated with median forward 12-month S&P 500 returns of approximately 20%, based on data from 1990–2025.
3FactSet Earnings Insight, April 2026. Earnings beat rates and forward estimates as reported for S&P 500 constituents through the end of the reporting period.
5U.S. Energy Information Administration (EIA), WTI crude oil spot price, April 2026; GasBuddy national average retail gasoline price data, May 2026.
Disclosures
Index Benchmarks presented within this report may not reflect factors relevant for your portfolio or your unique risks, goals or investment objectives. Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index.
The S&P 500® Index, or the Standard & Poor's 500® Index, is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies.
The MSCI ACWI ex USA Growth Index captures large and mid-cap securities exhibiting overall growth style characteristics across 22 Developed Markets (DM) countries and 24 Emerging Markets (EM) countries*. The growth investment style characteristics for index construction are defined using five variables: long-term forward EPS growth rate, short-term forward EPS growth rate,current internal growth rate and long-term historical EPS growth trend and long-term historical sales per share growth trend.
The Bloomberg Aggregate Bond® Index broadly tracks the performance of the U.S. investment-grade bond market. The index is composed of investment-grade government and corporate bonds.
Russell 2500 Index - The Russell 2500™ Index measures the performance of the small to midcap
segment of the US equity universe, commonly referred to as "smid" cap. The Russell 2500 Index is a subset of the Russell 3000® Index. It includes approximately 2500 of the smallest securities based on a combination of their market cap and current index membership.
The CBOE (Chicago Board Options Exchange) Volatility Index®, or VIX, is a real-time market index representing the market's expectations for volatility over the coming 30 days.
The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its earnings per share (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple.
West Texas Intermediate Index (WTI) is the main oil benchmark for North America as it is sourced from the United States, primarily from the Permian Basin. The oil comes mainly from Texas.
This communication may include forward looking statements. Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “seeks,” “could’” or the negative of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially.
Advisory Persons of Thrivent Advisor Network provide advisory services under a “doing business as” name or may have their own legal business entities. However, advisory services are engaged exclusively through Thrivent Advisor Network, LLC, a registered investment adviser. RetirePath Advisors and Thrivent Advisor Network, LLC are not affiliated companies. Information in this message is for the intended recipient[s] only. Please visit our website retirepathadvisors.com for important disclosures.