CWS Market Review – April 28, 2026

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

Beginning on March 30 and ending yesterday, the S&P 500 gained 13.1%, and the Nasdaq Composite gained 19.7%. I referenced similar numbers before, you’ll have to forgive me for any repetition, but this rally has been quite extraordinary.

The stock market has vaulted forward despite uncertain geopolitical events and growing problems with certain parts of the economy.

Are investors being foolish or are there solid fundamental reasons that justify higher equity prices?

Some market watchers are calling this a bubble. I think that’s very premature, although it could be true regarding certain tech stocks. If we were to go back to the start of 2022 and adjust the market’s gains for inflation, then the market has done decently well, but nothing out of the ordinary.

On Tuesday, we finally got a reversal of the previous trend. By that, I mean that the Nasdaq fell close to 1% while the Dow 30 was nearly flat. Gold and silver also did poorly on Tuesday.

I have been surprised by how strong growth stocks have been in the recent rally compared with value. Normally growth stocks lead during up markets, but I’m impressed by how wide the gap has been. Also, prior to the recent rally, value stocks had been holding up well compared with growth. That all got washed away in less than one month.

Here’s a look at how the S&P 500 Growth ETF (in black) has performed versus the S&P 500 Value ETF (green):

The oil market was shocked today by the UAE saying it’s withdrawing from OPEC. The country has consistently pushed for higher production quotas. Iran is expected to submit a revised peace proposal. President Trump rejected an earlier proposal.

The Federal Reserve meets again this week. The policy statement will be released tomorrow afternoon. I’ll spoil the ending for you: the Fed won’t be making any changes to interest rates.

But the Fed still may generate some news. That’s because the central bank finds itself in a difficult spot. Thanks to higher energy prices, Americans are suffering from higher inflation. At the same time, the broader economy could be slowing down. To be very blunt, the U.S. economy may need higher and lower rates at the same time. Since the Fed can’t possibly deliver that, I expect rates to stay the same for some time. Futures traders don’t see the Fed touching interest until the end of the next year.

Bear in mind that the recent consumer confidence report was the lowest on record. The April jobs report won’t be out until Friday, May 8, and it may not be a good one. The jobs report for March was surprisingly good (+178,000). In fact, I wouldn’t be surprised to see that get revised lower.

What really caught my attention was the weak growth for average hourly earnings which rose only 0.2% for March. If problems show up in the economy, this is likely where we’ll see the pain first.

A Strong Earnings Season So far

Wall Street is currently digesting Q1 earnings. So far, it’s been a pretty good earnings season. The S&P 500 is currently on pace to report its sixth quarter in a row of double-digit earnings growth. (The following data is courtesy our friends at FactSet.)

This week, 180 stocks in the S&P 500 are due to report, along with 11 stocks in the Dow, and five of the Mag 7.

By the way, of the Mag 7 stocks, Wall Street desperately wants to hear how much they plan to invest in AI. In January, Microsoft, Google, Amazon and Meta said they’re aiming to spending $650 billion on AI this year. Wall Street wants to hear an update.

So far, 28% of companies in the S&P 500 have reported Q1 earnings. Of those, 84% have beaten Wall Street’s expectations. That’s well above the long-term average. (That’s right. On Wall Street, it’s expected that you beat expectations.)

Companies are also beating expectations by a larger-than-normal margin. Average earnings beats are coming in at 12.3% above consensus. That’s nearly twice the long-term average.

Earnings growth for Q1 is currently tracking at 15.1%. Actually, that number has steadily increased as we’ve seen better reports come out.

Quarterly revenue growth has been particularly strong. So far, 81% of companies have beaten their estimates for sales growth. The five-year average is at 70%. All told, companies are beating their sales consensus by 2%. For Q1, sales growth is currently tracking at 10.3%. Like earnings, that number has also trended higher. If that number holds, it will mark the best quarter for revenue growth since Q3 of 2022.

Wall Street expects very good earnings growth for this year. For 2026, expectations are currently running at 18.6%. For the remaining three quarters, the expectations are for Q2 at 20.6%, Q3 at 22.7% and Q4 at 20.4%. The forward P/E Ratio for the S&P 500 is currently at 20.9%. That’s high, but it’s not excessive.

As I look at these earnings reports, I’ve been especially impressed by the profit margin. Wide and rising operating margins are a quick and easy way to see if a company is doing well. For Q1, the market’s overall net profit margin is running at 13.4%. If that holds up, it will be highest one in FactSet’s record which goes back to 2009.

As impressive as these numbers are, Wall Street expects even better numbers this year. The current estimate for net margin is 14.1% for Q2, 14.6% for Q3 and 14.6% for Q4.

Looking at Church & Dwight

One of our former Buy List stocks, Church & Dwight (CHD) has not been performing well. I like to take notice when good companies have bad stocks. That’s often a good place to find a bargain.

Church & Dwight is your quintessential consumer staple. It tends to do well when the economy is suffering. A little more than a year ago, CHD got as high as $116 per share. Even though the market has rallied since then, shares of CHD are now trading around $96 per share. It even recently dipped below $92 per share.

Despite this, Church & Dwight’s business has remained strong. Is it really a good idea to make a long-term bet against a company that makes Arm & Hammer baking soda and Trojan condoms? Church Dwight has about 5,000 employees and it generates about $5 billion to $6 billion in sales each year. The company also makes laundry detergent, cat litter, toothpaste, deodorant, and OxiClean.

The company has beaten Wall Street’s earnings estimates for the last 12 quarters in a row. For this year, Wall Street expects earnings of $3.75 per share, and $4 per share for 2027.

Church Dwight recently raised its dividend by 4.2%. This was it 30th yearly increase in a row. In January, the company said it expects to grow earnings this year by 5% to 8%, which works out to 2026 earnings of $3.70 to $3.81 per share.

I also like that CHD has gradually exited slower-growing lower-margin businesses. That caused sales to decline, but it’s in the interest of the company over the long term. CHD also faces tariff issues as some of its products are outsourced to China.

CHD’s Q1 earnings report is due out on Friday, May 1.

That’s all for now. Stayed tuned for tomorrow’s policy statement from the Federal Reserve. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

Posted by on April 28th, 2026 at 6:02 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.