US Markets
Despite a late-month rally, stocks fell in April as investors struggled with a hotter-than-expected inflation report and mixed news about the economy.
The Dow Jones Industrial Average dropped 5.00%, while the Standard & Poor’s 500 Index declined 4.16%. The tech-heavy Nasdaq Composite fell 4.41%.1
Mixed Economic Data
Economic data out early in the month unnerved investors, and conflicting comments from Fed officials regarding future rate moves exacerbated the selling pressure.
Better-than-expected jobs data for the week buoyed markets, but sellers had the upper hand as trading got underway.2,3
Stubborn Inflation
Markets continued lower the following week when fresh Consumer Price Index data showed that March inflation was hotter than expected.
Bond yields rose, and stocks retreated in response. Stocks breathed a sigh of relief when the wholesale inflation report, released the following day, was less than the consensus estimate.4,5,6
Mixed Signals from the Fed
Remarks from Fed Chair Jerome Powell also unsettled traders, as his tone appeared to shift from confident to not-so-confident about interest rate cuts.
A stronger-than-expected retail sales report was one of the few bright spots among the economic reports. It suggested that consumers were spending despite rising inflation.7,8
Middle East Tensions
Tensions in the Middle East influenced trading throughout the month.
Despite the headwinds, stocks pushed higher in the final full week of trading as upbeat Q1 reports from two mega-cap tech stocks emboldened investors. But the short-term rally gave way to selling as the month came to a close.9,10,11
What Investors May Be Talking About In May
The Fed’s two-day policy meeting ended on May 1, but if March is any indication, the “headline-grabbing” comments from Fed officials won’t start until a few days after the Fed’s official meeting concludes.
Federal Reserve policy limits the extent to which Federal Open Market Committee (FOMC) participants and staff can speak publicly or grant interviews during Federal Reserve blackout periods, which begin the second Saturday preceding a FOMC meeting and end the Thursday following a meeting unless otherwise noted.
Starting on May 2, Federal Reserve governors and presidents are allowed to schedule speaking events.
During the speeches, they are allowed to give their personal perspectives on the economy, inflation, and interest rates. Last month, several speeches showed a divided Fed regarding what’s next with interest rates.
When the Fed’s official meeting ended on March 20, the formal Fed statement said officials had pencilled in three quarter-point cuts in short-term rates by the end of 2024.
But a short time later, Fed officials started to tell a different story. Atlanta Fed President Raphael Bostic suggested one interest rate cut, followed a few days later by Minneapolis President Neel Kashkari saying that cuts may be off the table entirely.13,14
So, while the markets digest the Fed’s official statement on May 1, they also anticipate what Fed officials will say in the coming weeks.
World Markets
The MSCI EAFE Index fell 2.93% in April.15
In continental Europe, there were more markets in the red than in the green. Germany (-3.11%), Italy (-2.89%), France (-2.69%), and Spain (-1.99%) trended lower for the month. Meanwhile, the U.K. notched a gain, picking up 2.42%.16
The Pacific Rim markets were also mixed. Hong Kong rose 7.39%, while Japan dropped 4.86%, and Korea lost 1.99%. Australia also was under pressure, slipping 2.95%.17
The Fed
Minutes from the March FOMC meeting, released on April 10, showed officials’ concern that inflation wasn’t slowing down quickly enough toward the Fed’s 2% target.
They reiterated that rate cuts were still on the table for this year. The Fed funds rate remains at the 5.25–5.50% target range as of the end of April. Investor attention will shift to indicators following the Fed’s decision at its April 30–May 1 meeting.26
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1. WSJ.com, April 30, 2024
2. WSJ.com, April 4, 2024
3. WSJ.com, April 5, 2024
4. CNBC.com, April 10, 2024
5. WSJ.com, April 11, 2024
6. WSJ.com, April 11, 2024
7. CNBC.com, April 15, 2024
8. WSJ.com, April 16, 2024
9. CNBC.com, April 21, 2024
10. CNBC.com, April 23, 2024
11. WSJ.com, April 25, 2024
12. SectorSPDR.com, April 30, 2024
13. CNBC.com, April 5, 2024
14. Reuters.com, April 10, 2024
15. MSCI.com, April 30, 2024
16. MSCI.com, April 30, 2024
17. MSCI.com, April 30, 2024
18. WSJ.com, April 15, 2024
19. CNBC.com, April 5, 2024
20. CNBC.com, April 15, 2024
21. CNBC.com, April 16, 2024
22. Census.gov, April 23, 2024
23. Reuters.com, April 18, 2024
24. CNBC.com, April 10, 2024
25. BankingJournal.aba.com, April 24, 2024
26. FederalReserve.gov, April 10, 2024
27. NationalRetailFederation, 2024
28. NationalRetailFederation, 2024
29. Oberlo.com, 2024
30. FinanceBuzz.com, April 11, 2024
31. FinanceBuzz.com, April 11, 2024
32. FinanceBuzz.com, April 11, 2024
33. FinanceBuzz.com, April 11, 2024
34. FinanceBuzz.com, April 11, 2024
35. FinanceBuzz.com, April 11, 2024
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