Monthly Market Update – April 2024

By Simmons Investment Advisors on May 1, 2024

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Headlines from Last Month:

• US stocks pulled back in April on “higher for longer” concerns following higher than anticipated inflation data.
• Earnings season kicked off mid-month with several major banks beating expected results – overall earnings have been relatively good.
• Federal Reserve:
  • In mid-April, Chairman Powell indicated that the hot inflation data has validated their wait-and-see approach to cutting rates, and that “If higher inflation does persist, we can maintain the current level of restriction for as long as needed.”
  • The Fed is expected to hold the policy rate steady/unchanged at a range of 5.25% to 5.50% at today’s (May 1^st) meeting, which would be the 6^th consecutive time.
• The European Central Bank held interest rates at 4.00% for a 5^th straight meeting but indicated for the first time that cuts are near.
• The Israel-Gaza War:
  • The war is now in its seventh month.
  • Israel bombed the Iranian consulate in Damascus, Syria on April 1^st.
  • Iran retaliated on April 13^th by launching missiles and unmanned drones (most of which were shot down) in a five-hour strike.
  • College student protests at prominent institutions have garnered lots of media attention over the past week.
• The price of Oil fell about -1.5% in April, up 14.85% in 2024, but still down -12.55% from the September ‘23 high.  Concerns about supply shocks around the world have spurred this year’s rally.
• Gold continued to move higher, adding 2.15% last month, up 10.35% for the year and almost 23% since the Oct 5^th low.  The move is partially attributed to buying by central banks as they look to diversify away from US Dollars.

• Economic Data:
  • US GDP for the 1^st quarter rose 1.6% (annualized), well below expectations of 2.5% ⁽ⁱ⁾. and down from 3.4% at the end of 2023 ⁽ⁱ⁾.
  • Employment/Unemployment:
    • US nonfarm payrolls increased by 303K in March, much stronger than the expected 200K. 
    • Unemployment fell from 3.9% to 3.8%, as expected.
  • Retail Sales:
    • Rose 0.7% in March, much higher than the expected increase of 0.3% ⁽ⁱ⁾.
    • February’s number was revised up from 0.8% to 0.9% ⁽ⁱ⁾.
  • Inflation:
    • Consumer Price Index:
      • CPI rose 0.4% (vs expectations of 0.3%) from last month, increasing 3.5% (higher than the anticipated 3.4%) compared to a year ago ⁽ⁱ⁾.
      • Core CPI (excludes food and energy) rose 0.4% from last month (vs the expected 0.3%) and 3.8% year over year (vs estimates for 3.7% ⁽ⁱ⁾).
    • Producer Price Index:
      • PPI increased 0.2% in March, less than estimates of 0.3% after jumping 0.6% in February.  On a 12-month basis, it rose 2.1% ⁽ⁱ⁾, the biggest move since last April.
      • Core PPI (excludes food and energy) increased 0.2% and 2.8% from a year ago, both as expected ⁽ⁱ⁾.
    • Personal-Consumption Expenditures Index:
      • PCE rose 2.7% from a year ago (higher than the expected increase to 2.6%, and up from the previous month’s increase of 2.5%).  On a monthly basis, PCE rose 0.3%, unchanged from the pace seen in February ⁽ⁱ⁾.
      • Core PCE (excludes food and energy) held steady in March on a monthly basis (0.3%, as anticipated) and a year-over-year basis (2.8%, above the consensus estimate of 2.7%) ⁽ⁱ⁾.
    • Personal Spending rose 0.8% in March (above the expected rise of 0.7%) ⁽ⁱ⁾.
    • Personal Income increased 0.5%, in-line with estimates ⁽ⁱ⁾.

US Equities:

• Investors focused more on inflation concerns (and therefore expectations for the Fed to maintain high interest rates) than they did on positive earnings results.
• The Utility sector was the best performing sector in April, up just under 2% – it was the only one in the green last month.
• Growth vs. Value:
  • Growth (Russell 1000 Growth Index) lost -4.28% while Value (Russell 1000 Value Index) fell -4.39%.
  • For the year, Growth is up 6.45% and Value is up 3.61%.
• Small-cap stocks (Russell 2000 Index) dropped -7.09% last month, now down -2.62% for the year.

• Monthly performance, calculated on a price return basis:
  • Dow lost -5.00%
  • S&P 500 fell -4.16%
  • Nasdaq dropped -4.41%
• Year-to-date performance, calculated on a price return basis:
  • Dow is up 0.34%
  • S&P 500 is up 5.57%
  • Nasdaq is up 4.31%

US Fixed Income:  – bonds yields continued to increase, on higher inflation data:

• Yields on US Treasuries at the end of April:
  • 1 year – 5.22% ^(iv)
  • 2 year – 4.85% ^(iv)
  • 10 year – 4.65% ^(iv)
• As a point of reference, at March month-end, yields were at:
  • 1 year – 5.02% ^(iv)
  • 2 year – 4.63% ^(iv)
  • 10 year – 4.20% ^(iv)

Regards,

Mike & Steve

DISCLOSURE: All data is as of previous month-end (April 30^th, 2024).  Sources include www.cnbc.com (i), https://www.cnn.com/business (ii), https://finance.yahoo.com (iii), other public websites, Hightower Advisors, LLC (iv), FactSet (v), and  Barron’s (vi).