Stocks hit new highs in April despite economic headwinds signaling caution ahead.

In April, stocks reached new all-time highs, driven by gains in small-cap stocks and strong first-quarter earnings. The U.S. economy showed a 2% GDP rebound in Q1, supported by AI infrastructure and government spending, but consumer spending growth slowed. Rising energy prices, higher bond yields, and accelerating core inflation suggest increasing economic challenges in the second quarter. Investors should remain cautious as current stock prices may not fully reflect these forward risks.