April marked a significant shift in the stock market, with each of the benchmark indexes enduring their first downturn in several months. Various factors influenced this downturn, including the escalating crisis in the Middle East, increased spending to support Ukraine in its war with Russia, rising inflation, and the Federal Reserve’s apparent intent to hold interest rates at a two-decade high. This decline also put the S&P 500 (1) on track to end a streak of five straight months of gains. Additionally, consumer confidence fell in April to its lowest level since 2022. Despite the labor market’s continued support of job growth, labor costs increased the most in a year, driven higher
by wage pressures that are helping to push inflation higher.
April saw varied performance across different market sectors. Only utilities managed to end the month on a positive note. The remaining ten sectors finished in the red, with real estate (-8.4%), information technology (-5.3%), and health care (-5.2%) experiencing the most significant declines.
In April, bond yields increased as bond prices decreased. The ten-year Treasury yields generally closed the month on an upward trend, with the two-year Treasury yield surging by approximately 35.0 basis points, reaching around 5.05% on the final day of April. Simultaneously, the dollar strengthened against a basket of world currencies. Gold prices also experienced an upward climb, while crude oil prices dipped lower.
The chart above reflects price changes, not total returns. Because it does not include dividends or splits, it should not be used to benchmark the performance of specific investments.
High mortgage rates and limited inventory continued to affect the housing market, leading to a decline in sales of existing homes but an increase in new single-family homes. Selling prices for both new and existing homes continued to rise.
Looking ahead to May, the recent FOMC meeting didn’t offer any major surprises. April’s employment data showed lower wage growth and higher unemployment figures, indicating a potential normalization of the labor market toward a balance between labor supply and demand. If this trend persists in future job reports, it could prompt the Fed to move forward with the anticipated rate cuts. Currently, the market has 2-3 rate cuts priced in for 2024.
Investors will also closely monitor corporate earnings and the impact of ongoing tensions in the Middle East throughout the month. Despite the decline in April, historical trends suggest that May usually yields positive stock results.
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1. S&P 500 – is an unmanaged groups of securities considered to be representative of the stock market in general.
This material contains an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources.
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward-looking and should not be viewed as an indication of future results.
