- The S&P 500® was up 1.46% in April, bringing its YTD return to 8.59%.
- The Dow Jones Industrial Average® rose 2.48% for the month and was up 2.87% YTD.
- The S&P MidCap 400® decreased 0.87% for the month, bringing its YTD return to 2.47%.
- The S&P SmallCap 600® was down 2.87% in April and had a YTD return of -0.81%.
Battle lines were drawn in April. No, not Biden versus Trump, DeSantis versus Disney, Default versus Debt Ceiling, First Republic Bank (-75% for April and -97% YTD) versus its Depositors, or even Pro-Life versus Pro-Choice, but the market battle: Recession versus Pull Back. A slowing economy with continued high inflation (cost-push) led to acceptable corporate earnings, which beat expectations (thanks to recent downgrades in the estimates), as strong employment countered the continuing flow of layoffs, which, when measured against employment levels (and increases over the past few years), seemed numerous in announcements but minor in numbers (cutbacks). The bottom line for April was a battle for the black, with the result for the S&P 500 being a 1.46% April gain, after a rebounding March return of 3.51%, bringing the index up 8.59% YTD. The market embraced what it expects to be the U.S. Federal Reserve’s last hurrah of interest rate increases (at least for this cycle—come back in a decade, or less), with futures pointing to an 85% chance of a 0.25% interest rate increase at the May 2-3 meeting. At this point, most see a stop (not even a pause) after that, with the speculation turning to when the first interest rate cut will occur (not that anyone believes the FOMC’s “far off” dot-plot estimate of 2024). While the Fed may be done with increases, the next drama test will be the debt ceiling and spending level debate, with the “X” date a product of game theory (with this one having nothing to do with the official optimal decision-making theory, but a function of the Treasury’s “adjustments” and “definitions”). At this point, few expect a default or government closure, with the public political battle expected to be dragged on to within a week or so of the “X” date. The result, however, will set government spending and affect credits and taxes, and therefore corporate profits, with some winners and some losers.
Volatility significantly decreased for April, as the S&P 500 posted a 1.46% gain (after trading in the red for most of the month) on positive breadth (266 up, with 102 up at least 5%, compared to 235 down with 89 down at least 5%), as it was up 8.59% YTD, on positive breadth (291 up with 136 up at least 10% and 212 down, with 76 down at least 10%). Eight of the eleven sectors were positive for the month (Communication Services did the best, up 3.56% and Industrials the worst, down 1.22%), as seven were up YTD (Communication Services at 24.46%, Financials at -3.21%). The average daily high/low spread declined to 0.92% from last month’s 1.51%, and 7 of the 19 days had an intraday high/low spread of at least 1%, compared to 11 last month, as trading declined 24% for the month.
The S&P 500 closed at 4,169.48, up 1.46% (1.56% with dividends) from last month's close of 4,109.31, when it was up 3.51% (3.67%) from the prior month's close of 3,970.15 (-2.61%,
-2.44%). For the three-month period, the index was up 2.28% (2.72%), as the YTD period was up 8.59% (9.17%) and the one-year return turned positive, up 0.91% (2.66%). The Dow ended the month at 34,098.16, up 2.48% (2.57% with dividends) from last month's close of 33,274.15, when it was up 1.89% (2.08%) from the prior month's close of 33,656.70 (-4.19%, -3.94%). The Dow was down 7.34% from its Jan. 4, 2022, closing high (of 36,799.65). The YTD period was up 2.87% (3.53%), the one-year return was 3.40% (5.64%) and the 2022 return was