Key Highlights
- The S&P 500® was down 4.16% in April, bringing its YTD return to 5.57%.
- The Dow Jones Industrial Average® dropped 5.00% for the month and was up 0.34% YTD.
- The S&P MidCap 400® lost 6.08% for the month, bringing its YTD return to 2.86%.
- The S&P SmallCap 600® was off 5.71% in April and down 3.82% YTD.
Market Snapshot
April’s -4.16% return for the S&P 500 stirred but did not shake the index’s 5,000 level; thanks to its Q1 2024 10.16% gain, the index still ended April with a positive YTD level of 5.57%. The current level appears to be in the area of a defendable support level. A significant amount of money is being directly put into the U.S. economy by our friends in Washington (a minimum of USD 34 billion via the recent Israel/Taiwan/Ukraine legislation for U.S. replenishment and USD 39 billion via the CHIP and Science Act in grants and loans for U.S. production), employment (with paychecks) remains high, and current actual earnings (and cash flow) are good (but the guidance not as much—even as Q2, Q3 and Q4 2024 have record estimates), as the U.S. was seen as having the best growth (and stability) potential globally.
While guidance headlines were protested, actual earnings are coming in above the 1% estimated gain (76.8% beat rate) and above the whispered 2.5% rate (2.7% at this point, and up 5.4% year-over-year), with sales 4.1% below the record Q4 2023 level (which is typical—something about the holiday sales), but up 4.1% year-over-year. Economic data came in on all sides (recession, the new concerns for stagnation, growth), adding volatility, but in the end, it was earnings and fundamentals (along with some implied projections from the data) that ruled the trades.
Year-to-date, the S&P 500 remained up 5.57% (with 10 of the 11 sectors up; Real Estate was down 9.86%), as breadth declined but remained positive (302 up and 199 down, compared to last March’s 369 and 134 YTD, respectively). The Magnificent 7 as a group still dominated, accounting for 51% of the index return (which included Apple’s 11.5% YTD decline and Tesla’s 26.2% YTD decline), as NVIDIA (up 74.5% YTD) represented 41% of the S&P 500’s YTD gain. And while not magnificent (unless you were a short seller), Boeing (BA; with many seeing it as a long-term buy) was the third-worst issue in the index, down 35.6% YTD.
Treasury Secretary Yellen made her second trip to China, as she attempted to get the country to reduce its exports and focus on growth through domestic demand. At the core of her discussions were what the U.S. considered artificially cheap Chinese export products, which threaten U.S. (and foreign) firms. Biden called to triple the 7.5% tariffs (under Section 301 of the U.S. Trade Act) on imported Chinese steel and aluminum (which Trump started in 2017). The U.S. continued to encourage domestic chip manufacturing (via the CHIPS and Science Act), as it awarded Samsung Electronics USD 6 billion, Micron Technology (MU) USD 6.1 billion and Taiwan Semiconductor Manufacturing (TSM) USD 6.6 billion; previously it had awarded Intel (INTC) USD 8.5 billion; USD 10 billion remains in the program to be awarded.
