Market Update
The U.S. stock market transitioned from a dour March, marked by deep-seated geopolitical anxiety, to a wave of record-breaking highs in April. U.S. stocks enjoyed their strongest month since the post-pandemic era, with the S&P 500 and the NASDAQ each reaching record highs, despite ongoing strife in the Middle East and rising inflation. After closing March at slightly above 6,500, the S&P 500 surged in April, crossing the 7,000 mark for the first time in its history. The NASDAQ also reached record levels, propelled by a 13-day winning streak, its longest in more than a decade. The Dow and the small caps of the Russell 2000 also posted notable monthly gains.
Whereas March was haunted by the risk of a full-scale war in Iran, the naval blockade of the Strait of Hormuz, and a surge in crude oil prices, April brought ceasefire negotiations and a temporary reopening of the Strait, which prompted oil prices to plummet before rising again. April's rally was also fueled by a powerful start to corporate earnings season, particularly from large tech and AI companies. Ten of the 11 market sectors ended April with gains, led by information technology, communication services, and consumer discretionary, each of which enjoyed double-digit gains. The only laggard was energy, which declined nearly 7.0%.
The Federal Reserve elected to hold the federal funds rate steady at 3.50%-3.75%, generally maintaining a neutral, "wait-and-see" approach, citing the need to see evidence that inflation is trending lower before considering a decrease in interest rates.
Corporate earnings have displayed notable resilience, with the S&P 500 tracking toward its sixth straight quarter of double-digit earnings growth. According to FactSet, with about 28% of companies having reported, the earnings growth rate sits at 15.1%, outpacing the initial estimates set at the end of March. AI and technology companies have dominated earnings thus far. In addition, the net profit margin for the S&P 500 reached 13.4% this quarter, which, according to FactSet, is the highest rate since tracking began in 2009.
International Markets
The European stock market began April with significant momentum. However, the rally cooled during the latter half of the month, influenced by rising inflation and escalating geopolitical tensions in the Middle East. While several of the major indexes managed to close the month ahead, the economy was impacted by surging energy prices and a "wait-and-see" approach from central banks. Asian markets also experienced a volatile month as a tech-driven rally was offset by rising energy costs triggered by the Middle East conflict. For April, the STOXX Europe 600 Index rose 1.9%; the United Kingdom's FTSE fell 0.7%; Japan's Nikkei 225 Index jumped 10.3%; while China's Shanghai Composite Index gained 4.9%.
On A Personal Note
Jeff and Peggy went to see blues legend Robert Cray at Memorial Hall, which is a really nice venue for live music. Mr. Cray is 70 years old and still has a voice reminiscent of years ago. Drew and Stephanie visited their daughter for her sorority’s parents’ weekend. It is hard to believe her freshman year is almost over! Spring soccer season is in full swing for Chris and his family. They had some sort of tournament or league games pretty much every weekend in the month. Lisa and David went to their first Red’s game of the season last month. It was a great day at the ballpark, and they are hoping for a winning season! April was filled with family and friend celebrations for Sam. From Easter to a couple of his friends getting engaged, it was a pretty joyful month! April brought some warm(ish) weather and outside play time! Taylor’s daughter now requests rides in her wagon and playing with her water table. They are excited for their first summer with a toddler.
