A Month the Bears Would Rather Forget

The bears got slaughtered in April.

The nattering nabobs of negativity, who had spent March sharpening their claws with considerable enthusiasm and no small amount of assistance from Wall Street and media analysts afflicted with Trump Derangement Syndrome, discovered in April that they had been preparing for a fight the market had no intention of having.

The S&P 500, oblivious to the script written for it, rose 10.4 percent, its finest monthly performance since that peculiar autumn of 2020, when stocks levitated on a cocktail of COVID vaccines, reopened retail, fiscal profligacy, and the prospect of a monetary authority that had lost the will to call closing time. The Nasdaq, never one to be outdone in matters of exuberance, gained 15.3 percent, a feat unmatched since the early pandemic delirium. The Dow, that stolid Victorian uncle of the index family, added 7.1 percent and spent the final hours of the month flirting shamelessly with 50,000.

All three closed Thursday at record highs. The S&P finished above 7,200 for the first time, a number that would have seemed fanciful to anyone reading the financial pages six weeks ago — when the index sat nine percent below its January peak, and the commentariat was rehearsing its recession soliloquies.

The Bad News That Didn’t Bite

The catalog of horrors that were supposed to deliver a bear market makes for entertaining reading in retrospect. A war in Iran. Oil above $100. The Fed’s preferred inflation gauge flashing hotter on energy costs. GDP arriving below expectations. Consumer spending decelerating. The European Central Bank, the Bank of England, and the Federal Reserve all frozen in place. Gasoline prices threatening to leave the rest of the economy running on fumes.

All of that happened. But the bears couldn’t kill the beast of the Golden Age bull market.

We confess to a certain unseemly satisfaction. On March 4, in this newsletter, we offered readers our standing counsel: Panickers Always Lose Money — PALM. We observed that the S&P had already climbed 34 percent from the Liberation Day swoon of April 2025. We noted (not for the first time nor, we suspect, the last) that the pattern is as reliable as it is ignored: the catastrophe is announced, Trump is blamed, the selling commences, and then the world declines to end on schedule.

In April, the world, once again, declined. It was a cruel month for the TDS-afflicted bears.

Built in America

What powered the market’s impertinence was the artificial intelligence buildout. And the detail that deserves the most attention is geographical. This is an American buildout. Tariffs have rendered the offshoring of AI infrastructure uneconomical. The Trump tax cuts and full depreciation rules have made domestic construction not merely attractive but, for any CFO who can operate a calculator, irresistible. And beneath the arithmetic lies something less quantifiable but no less real: a renewed economic nationalism that has made building in America feel less like a regulatory concession and more like a competitive advantage. Add to that the ubiquitous awareness of the importance of national security and supply chain durability to economic growth.

The semiconductor sector rose 37 percent in April. The Magnificent Seven gained north of 16 percent. The Philadelphia Semiconductor Index recorded 18 consecutive sessions of gains, a streak that we are reliably told is without precedent, which is the sort of phrase financial writers are rarely permitted to use without exaggeration, but in this case it happens to be literally true.

Caterpillar and the Escape from the Server Room

The more interesting development, though, was Caterpillar, that magnificent yellow bellwether of the physical economy. Its shares jumped nearly 10 percent on Thursday after reporting earnings fattened by AI data-center demand and raising its full-year outlook. The stock is up 41 percent this year. When the AI trade starts moving Caterpillar, it has escaped the server room and become an industrial story.

Big Tech earnings, meanwhile, offered their customary mixed verdict. Alphabet soared 10 percent on cloud strength. Microsoft and Meta sagged on capital-expenditure anxiety. Nvidia shed 4.6 percent on the day — though the stock remains up 83 percent from a year ago and 92 percent from its 12-month lows, making Thursday’s decline less a distress signal than the market catching its breath after a very long sprint. The distinction investors are drawing is increasingly sharp: companies earning from AI are being rewarded; companies merely spending on it are being asked to explain how this spending will translate into future profits.

PALM Rules

As for the panic merchants — the ones who had constructed, with great care, a chain of causation running from war to oil shock to recession to bear market, each link forged with the grim confidence of an actuarial table — they have grown conspicuously quiet. The S&P 500 has traveled from a 4.6 percent first-quarter loss to the highest close in its history. The apologies, naturally, have not been forthcoming. They never are.

But the market has rendered its judgment, as it always does, with the serene indifference of an institution that has seen a great many panics and survived them all. The verdict, once more: PALM.