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    The best month since 2020 has a catch

    Apple beat. Lilly crushed. Caterpillar surged. And then Q1 inflation printed 4.5%.

    May 1, 2026

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    Wall Street just closed its strongest April since 2020. The S&P 500 crossed 7,200 for the first time. The Nasdaq gained 15.3% on the month. Earnings from every corner of Big Tech validated the AI spending thesis.

    And then the Bureau of Economic Analysis published Q1 inflation at 4.5%.

    What matters:

    • The Q1 GDP price index printed 4.5%, up from 2.9% in Q4, the sharpest quarterly acceleration since the oil shock began. Core PCE within the GDP report hit 4.3%, up from 2.7%.

    • Apple (AAPL) beat after the close with EPS of $2.01 versus the $1.94 consensus on revenue of $111.2 billion, up 17% year over year. The stock is up roughly 3% in premarket.

    • Eli Lilly (LLY) crushed estimates with adjusted EPS of $8.55 versus $6.66 expected on revenue of $19.80 billion, up 56% year over year, and raised full-year guidance.

    • Caterpillar (CAT) posted EPS of $5.54 versus the $4.62 consensus on revenue of $17.42 billion, up 22%, with a record backlog of $63 billion.

    The inflation number is the one that lasts.

    Apple's beat was clean. Revenue of $111.2 billion set a March quarter record. iPhone revenue hit $56.99 billion, up 22% year over year. Services climbed to $30.9 billion, also a record. Gross margin expanded to 49.3% from 47.1% a year ago.

    But Apple is a single stock. The PCE data is the macro backdrop everything else trades against.

    Q1 headline PCE inflation at 4.5% is nearly double the Q4 reading of 2.9%. Core PCE at 4.3% is up from 2.7%. The March monthly reading came in at 3.5% year over year for headline and 3.2% for core, both accelerating from the prior month. Every one of those numbers moved in the wrong direction for anyone expecting rate cuts this year.

    GDP itself grew 2.0%, better than the prior quarter's 0.5% but below the 2.3% consensus. The economy is growing. Prices are growing faster. That is the environment where the Fed stays put, and the 8-4 FOMC split from earlier this week confirms the committee sees it the same way.

    The earnings are real. The question is what multiple they deserve.

    Eli Lilly's 56% revenue growth and raised guidance make it the strongest fundamental story in healthcare right now. Mounjaro sales surged 125% year over year. Zepbound rose 80%. The GLP-1 category is expanding faster than the market modeled, and Lilly's newly approved obesity pill Foundayo launches this quarter. Management raised full-year revenue guidance to $82 billion to $85 billion, up from $80 billion to $83 billion, and lifted adjusted EPS guidance to $35.50 to $37.00, up from $33.50 to $35.00.

    Caterpillar tells the same story from the industrial side. Construction Industries sales jumped 38% to $7.2 billion. Power and Energy rose 22% to $7.0 billion. The $63 billion backlog is a company record, with Power and Energy orders surging 48%. Management raised its full-year revenue outlook to low double-digit growth, up from about 7% previously.

    These are not companies coasting on sentiment. They are printing real demand. But equity multiples are set at the intersection of earnings growth and discount rates. If PCE keeps running above 4%, the Fed has no room to cut, the 10-year yield stays elevated around 4.39%, and the multiple the market assigns to even the strongest growers faces pressure.

    Exxon and Chevron report into the strongest energy backdrop in years.

    Exxon Mobil (XOM) reports before the bell this morning with consensus near $0.98 in EPS on roughly $81 billion in revenue. Chevron (CVX) follows with expected EPS around $1.00 on about $52 billion in revenue.

    Brent is trading around $112 after pulling back from Wednesday's intraday spike above $120. WTI is near $106. The Strait remains effectively closed with traffic at roughly 5% of pre-conflict levels. At these crude prices, integrated majors are generating outsized cash flows. The lines to watch: Permian and Guyana production volumes, refining margin guidance, and whether either company accelerates buybacks.

    Where things stand.

    The S&P 500 closed Thursday at 7,209.01, a record. The Nasdaq finished at 24,892.31, also a record. The Dow rose 790 points to 49,652.14. April was the best month for all three indexes since 2020, with the S&P adding 10.4% and the Nasdaq 15.3%.

    Gold is trading around $4,640. Bitcoin is near $77,000. The 10-year yield is around 4.39%.

    Futures are pointing modestly higher this morning, with the Dow and S&P up slightly and the Nasdaq roughly flat. The market is choosing to celebrate earnings over inflation for now. How long that lasts with PCE printing 4.5% and the Fed divided 8-4 on direction is the question that carries into next week.