May 1, 2026 · Michael Vodicka · 6 min read
The S&P 500 just delivered its best month since November 2020 — surging more than 10% to a fresh all-time high. Here’s what drove it, and three powerful reasons the rally has more room to run.
A Blockbuster April for the S&P 500
The S&P 500 (SPY) just put together one of the most powerful months we’ve seen in years. The index surged +10.4% in April — its biggest monthly gain since November 2020 — and closed the month at a record 7,209, its first close ever above 7,200. The Nasdaq jumped more than 15% for its best month since April 2020. The Dow had its strongest month since late 2024. This is a stunning turnaround from where we sat just a few weeks ago.
Remember where we started 2026: a sluggish first quarter, a 9% peak-to-trough pullback, and headlines dominated by geopolitical tension. I told you in my Q1 letter that the bull market was intact, fundamentals were strong, and the next leg higher was coming. April delivered — emphatically.
S&P 500 Monthly Returns — 2026 YTD
April’s historic surge erased the Q1 weakness and pushed the index to record highs.
+1.4%
-0.8%
-5.0%
+10.4%
★ Largest monthly gain for the S&P 500 since November 2020.
With April’s rally in the books, the S&P 500 is now positive on the year and sitting at fresh record highs. The bull market that began in October 2022 is firing on all cylinders again. So what changed? Let me walk you through it.
3 Reasons the S&P 500 Soared in April
Big rallies don’t happen by accident. There were three powerful, identifiable forces behind April’s breakout — and all three are showing up in the data.
1. Geopolitical Pressure Eased
The biggest weight lifted off the market in April was the Iran ceasefire. After months of escalation that drove oil prices to four-year highs, the U.S.-brokered ceasefire extension — and reports of ongoing peace negotiations through Pakistani mediators — took the worst-case scenarios off the table. Brent crude pulled back from $126, energy costs eased, and the inflation fears that had been spooking the bond market began to settle. When markets stop pricing in disaster, they have a way of running. April was that.
2. Q1 Earnings Have Been Spectacular
This is the part nobody can argue with. Of the S&P 500 companies that have reported so far, 84% have beaten earnings estimates — well above the 5-year average of 78% — and aggregate earnings are coming in 12.3% above estimates, nearly double the historical norm. Caterpillar popped 10% on a record quarter. Eli Lilly jumped 9% and raised guidance. Alphabet surged 10% after blowing out cloud and ad expectations. Qualcomm gained 16%. The earnings story isn’t just intact — it’s accelerating.
Q1 2026 Earnings: Beating on Every Measure
Percentage of S&P 500 companies beating estimates — Q1 2026 vs. historical averages
76%
78%
84%
Source: FactSet. Q1 2026 results based on companies reporting through April 24, 2026.
3. AI Capex Just Got Bigger
All four hyperscalers — Alphabet, Amazon, Microsoft, and Meta — raised their already enormous 2026 capital expenditure guides on the back of last week’s earnings. Alphabet now expects up to $190 billion in capex this year. Microsoft guided to a similar range. This is a generational wave of investment in AI infrastructure, and it’s landing directly in the revenue lines of semiconductor and data-center companies. Intel had its biggest monthly gain since 1974, up roughly 50% in April. The AI supercycle isn’t a story anymore — it’s a balance sheet item.
“The bull market just delivered its best month in five years. Earnings are accelerating, geopolitical risk is fading, and the AI capex wave is getting bigger — not smaller. This is what a healthy bull market looks like.”
— Michael Vodicka, The Vodicka Group
3 Reasons to Stay Bullish for the Rest of 2026
A 10% month is going to make some investors nervous about “chasing” a rally. I want to push back on that. Here are three reasons I believe the market still has meaningful upside through year-end.
1 Earnings Are Set to Accelerate
This is the single most important point of this entire letter. Wall Street consensus is now calling for S&P 500 earnings growth of 20.6% in Q2, 22.7% in Q3, and 20.4% in Q4. For full-year 2026, that’s 18.6% earnings growth — the strongest year in over a decade outside of the post-pandemic rebound. Earnings are the engine of stock prices, and that engine is about to step on the gas.
2 The Rally Is Broadening Out
One of the most encouraging features of April’s rally is that it wasn’t just Big Tech. Eight of eleven sectors are reporting positive earnings growth this quarter, with industrials, financials, materials, and healthcare all contributing. The Russell 2000 small-cap index gained more than 2% on the final day of April alone — a sign that participation is widening. When more stocks join the rally, the rally tends to last longer. This is exactly the kind of broad-based strength I want to see.
3 Wall Street Sees More Upside
Even after April’s monster rally, every major Wall Street strategist still sees room to run. With analysts projecting roughly 18-19% full-year earnings growth and expectations rising for potential Fed rate cuts in the back half, the path of least resistance for the S&P 500 remains higher. Year-end targets at firms like Deutsche Bank (8,000) and Yardeni (7,700) imply continued upside from current levels — and that’s before factoring in any positive surprise from a Fed pivot or further geopolitical de-escalation.
S&P 500 Earnings Growth Is Accelerating
Year-over-year EPS growth — actuals through Q1 2026, consensus estimates Q2-Q4
+13.7%
+14.5%
+20.6% (E)
+22.7% (E)
+20.4% (E)
Source: FactSet. (A) = actual blended results. (E) = consensus estimate.
What to Expect Moving Forward
After a 10% month, it would be reasonable to see the market take a short breather. That’s normal — markets don’t go straight up, even in great years. But the bigger picture is what matters here: corporate earnings are accelerating, AI investment is scaling, geopolitical risk is fading, and a Fed rate cut could still be a tailwind in the back half of the year. The ingredients of a strong second half are all on the table.
I’m not making major changes to client portfolios. The playbook hasn’t changed: stay invested, stay diversified, and let the engine of corporate earnings do the heavy lifting. Investors who held through the Q1 turbulence have just been richly rewarded for their discipline — and I expect the back half of 2026 to reward patience even more.
Related Reading from The Vodicka Group:
→ S&P 500 Q1 2026 Update: Through the Storm, Into Clear Skies
→ S&P 500 March 2026 Update: Staying the Course
→ Backdoor Roth IRA Explained: How It Works in 2026
→ Schedule a Free Portfolio Review
As always, if my outlook changes, my clients and readers will be the first to know. I’ll be back with another update soon — have a great week!
Until next time,
Michael Vodicka
Founder & Lead Advisor · The Vodicka Group
Disclaimer: This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.
