By Paul R. La Monica
Sell in May and go away? Not this year.
Stocks have been on a tear. The Dow Jones Industrial Average has risen 0.9% this past week through midday Friday, while the S&P 500 index has gained 1.3% and the Nasdaq Composite is up 1.4%. The latter two, with gains of 10% and 15%, respectively, in April, posted their best months since 2020.
There was a lot that could have made the stock market fall. Investors shrugged off questions about when -- or even if -- the Federal Reserve would cut interest rates again this year after the central bank held rates steady, and they ignored the fact that Jerome Powell plans to stay on the Fed's Board of Governors even as Kevin Warsh prepares to become chair. Inflation came in hot as oil prices continued to rise, and earnings from Microsoft and Meta Platforms revealed sizable capital spending increases -- and resulted in falling stocks.
Yet good news elsewhere on the earnings front seems to be overshadowing geopolitical, Fed, and capex concerns. Eli Lilly earnings offered evidence that weight-loss drugs were only getting bigger; Coca-Cola's beat showed that not all soft-drink makers are suffering from an Ozempic overhang; Alphabet's capital spending paid off with big profits; and Caterpillar's numbers demonstrated that there's more to its business than mining and machinery.
More earnings are on their way -- and they could be the fuel for even more gains. Palantir Technologies, Advanced Micro Devices, and Arm Holdings should reveal more about the state of tech and artificial intelligence, but the market will also get a glimpse at how some leading healthcare and consumer companies are doing, most notably Pfizer, Anheuser-Busch InBev, Walt Disney, Uber Technologies, and McDonald's.
"Earnings and fundamentals are still driving this market," said Jack Herr, senior investment analyst at GuideStone Funds. "Now it's off to the races."
Even if fundamentals weren't so good, selling in May would likely be a bad idea. Over the past 12 years, the S&P 500 has gained a median 6.3% from May through October, according to LPL Financial data. The months of May and July have been particularly strong, notes Ryan Detrick, chief market strategist at Carson Group, with the S&P rising in May 12 times over the past 13 years, and 11 times in a row in July.
That doesn't mean it will be easy. The stock market's April surge pushed the Cboe Volatility Index, or VIX, down to 16.50 after soaring above 30 in late March, a sign that the wall of worry has been climbed. So continue to keep an eye out for the unexpected -- the April jobs numbers, due out on May 8, could pack a punch -- but it's much better betting on the fundamentals than a summer slowdown.
Forget selling, and just enjoy the sun.
Write to Paul R. La Monica at paul.lamonica@barrons.com
To subscribe to Barron's, visit http://www.barrons.com/subscribe
(END) Dow Jones Newswires
May 01, 2026 21:30 ET (01:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments