After a choppy March, stocks roared back in April with one of the strongest monthly gains in over five years, pushing the broad market indices to fresh highs on AI-driven tech leadership and solid earnings. The rally came despite persistent inflation and tensions in the Middle East underscoring the market’s willingness to look through macro noise. The key question now is whether that momentum can hold as higher prices begin to test the consumer.
Economic Highlights:
- The economy started the year on firmer footing, with growth re-accelerating and support coming from multiple engines. Q1 GDP rose 2.00%, up from 0.50% in the fourth quarter. Growth was boosted by a resilient consumer, an uptick in business investment, higher exports (positive contributor to GDP), and as government outlays resumed in earnest after the 43-day federal government shutdown in the prior quarter.
- Prices remained elevated in March due to the impact of oil prices from the Middle East conflict. The Core PCE Price index, the Fed’s preferred inflation gauge rose 3.20% YOY and was up 0.30% on the month. The annual headline inflation rate, which includes volatile gas and food prices, rose 3.50% and was up 0.70% on the month. The latest reading puts rates firmly above the central bank’s 2.00% target level.
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In what is likely Jerome Powell’s last meeting as Fed Chair, the central bank voted to hold the benchmark rate steady at a range of 3.50% and 3.75%. That was the third straight meeting the Fed voted to hold rates steady as inflation remains elevated, fueled in part by the U.S.-Iran war.
What War? Stocks Rocket Higher For April
The S&P 500 and Nasdaq Composite Index slammed the book closed on April trading, finishing the month with new record highs. The S&P 500 rose 10.40%, its best monthly gain in more than five years as it broke above the 7,200 level for the first time ever. Meanwhile, the tech heavy Nasdaq Composite had the hot hand, climbing 15.3% on renewed AI optimism for its best monthly gain in six years. This week, the earnings spotlight turned to MAG-7 members to help support bullish momentum. Meta, Microsoft, Google, and Apple all topped expectations. However, Meta and Microsoft shares dropped as investors were concerned with the increase in their AI-related capital spending plans, fueled in part by higher memory prices. Google-parent Alphabet also guided higher on capital spending, but shares managed to rise 10% nonetheless. Investors were excited about the tech giant’s 20% revenue growth, it’s fastest for any quarter since 2022. Alphabet also announced a backlog of $460 billion, nearly double where it was last quarter, due to demand for AI infrastructure. Apple, although not a major AI player, rallied on its results, guiding higher for Q2 on strength across a number of its product lines. While the stalemate in the Middle East has had a calming effect on markets, oil prices are beginning to weigh on consumer behavior but that still has yet to materially show up in the economic data. This week’s release of Q1 GDP showed the U.S. economy continuing to hum along, rising 2.00% for the quarter and up from 0.50% in Q4. It was a surprisingly strong print given that oil and gasoline are consumer necessities which experienced a sharp price increase during the quarter while the job market still remains soft. Consumers are unlikely to catch a break anytime soon on the financing side of the equation since the same shocks that are hitting their wallets are also keeping the Fed on the sidelines, with the Fed electing to hold rates steady at this week’s FOMC meeting.
With April in the rear view, investors are looking to keep the winning streak alive in May. The AI trade remains the primary catalyst as tech companies post blowout earnings while guiding higher for the year. That’s helped spur the Nasdaq Composite’s April rally and pushed the forward P/E to 25 in the process. However, that’s not far from the index’s peak of 28 late last year. For markets to continue to climb higher, the rally will need to broaden away from tech. That could prove tricky if oil prices are a drag on consumers. With the Middle East conflict entering its ninth week, companies have begun citing higher supply chain costs which they would look to re-coup with higher prices in the quarters ahead. Thus far, the consumer has remained resilient to elevated prices, flush with recent tax refunds. However, the concern is that summer is a busy driving season and fuel could crowd out other spending. In the past week, gasoline prices have risen 33 cents to $4.39/gallon. Consumers have typically pulled back on discretionary spending when gas prices exceed $4.00 per gallon. Since travel tends to lead to an acceleration in other spending, it will be telling for the economy if we begin to hear that consumers are electing “staycations” over vacations this summer.
The Week Ahead
Key reports include nonfarm payrolls, manufacturing, and services.
Every Pigment Tells a Story
Tucked inside Harvard University is a library unlike any other containing thousands of tiny jars, each holding a rare and historical pigment with individual stories about their origin and use. Known as the Forbes Pigment Collection at the Straus Center for Conservation and Technical Studies, the library contains more than 2,700 colors—along with hundreds of binding media and varnishes—and continues to grow. The archive of hues is a record of human ingenuity, science, trade, and sometimes unsettling history. Each pigment carries a story about how people have tried to capture the colors in the world around them.
When early humans discovered that colored earth could be mixed with a sticky substance to leave a mark, the story or history of paint began. Materials such as ground minerals, charcoal, bone, and crushed stone were blended with binders such as animal fat and egg to create the first paints that were used to depict animals, leave behind handprints, and show scenes of daily life on cave walls. These early works—rendered in reds, yellows, blacks, and whites—remain some of the oldest records of human expression and storytelling.
As civilizations developed, so did the sophistication of paint. In ancient Egypt and Greece, artists and craftsmen learned to heat and combine substances like sand, lime, and copper to create Egyptian blue. Vivid red could be made through a dangerous process of heating mercury and sulfur, while white pigment was produced through a laborious and also noxious process involving lead, vinegar, and manure. Cadmium yellow and emerald green, admired for their intensity, are also made from toxic heavy metals.
International trade made more and more color available to artists. Cochineal, a rich crimson color derived from female insects found in Mexico, was brought to Europe by Spanish traders and quickly became one of the most prized reds available. Another legendary pigment, ultramarine, was made from lapis lazuli mined in Afghanistan. Dutch painter Johannes Vermeer famously used ultramarine to paint the Girl with a Pearl Earring, and he loved the color so much that he pushed his family into debt to purchase it. “Mummy brown,” popular in the 18th and 19th centuries, was literally derived from ground Egyptian mummies mixed with resin. This was not the afterlife that ancient Egyptians has planned. Plant-based pigments in the library include Quercitron, a warm yellow from black oak bark; Brazilwood, a reddish-brown once traded like spice; and Annatto, a vibrant orange derived from a South American shrub known as the “lipstick tree.”
Synthetic paints made colors more affordable and accessible, and by the end of the 19th century, painters no longer needed rare minerals or global trade networks to achieve a vibrant palette. This layered history behind all of these unique pigments and colors is what the Forbes Pigment Collection preserves. The collection was started in the early 20th century by Edward Forbes, an art historian and former director of the Fogg Art Museum, who led the institution from 1909 to 1944. Forbes traveled widely, gathering pigments from around the world to build the collection. The pigments are used by art experts to research and authenticate paintings. By comparing the materials in the library to those used in artworks, Forbes and other art historians could help determine authenticity of an artwork and uncover hidden details about how and when a piece was made.
Today, the collection continues to serve as both a scientific resource and a cultural archive. Using modern tools such as Raman spectroscopy and electron microscopy, researchers can analyze pigments at a molecular level. These techniques can reveal whether a painting contains materials that did not exist at the time it was supposedly created. In one case, a modern synthetic pigment helped reveal that a painting attributed to Jackson Pollock was not authentic.
Every pigment in the library truly has its unique story of discovery, chemistry, experimentation, labor, trade, and sometimes sacrifice, and today these stories are represented in thousands of tiny jars in Cambridge, Massachusetts.