Resilient Economic Growth: The GDP advanced at a slower-than-expected rate of 1.6% annualized in the first quarter, but final private sales were robust, rising at a 3.1% rate.
Equity Markets Pulled Back in April: The equity markets took a breather in April following the extraordinary rally since the lows in October of last year.
Robust Earnings Performance: For the full year, given the better than anticipated results thus far, operating earnings for the S&P 500 are now expected to grow 13.3% over 2023.
Fixed Income Market Volatility: The Federal Reserve maintains a dovish stance on interest rates, projecting three rate cuts in 2024, with the current rate held at 5.25%-5.50% from August 2023.
Policy Rate Staying Higher? The Federal Reserve continues to maintain its target inflation goal as of this month’s FOMC meeting indicating that rates can and will stay higher for longer. “Inflation has shown lack of further progress towards our 2% objective” – Fed Chairman Powell
Outlook Largely Intact: Although the economic growth came in a little slower and inflation has been a little higher to start the year, our outlook on the key themes driving equity and fixed income markets remain intact
Equity Markets
The equity markets took a breather in April following the extraordinary rally since the lows in October of last year. Performance during the month was choppy as economic data and a repricing of the likelihood of the Federal Reserve cutting interest rates this year. The month began with three negative weeks in a row, with the index falling -5.5% to an intramonth low on April 19th. This drop was mostly attributed to the hotter inflation readings and hawkish speaking engagements from members of the Federal Reserve. The market rebounded in the final week of April on the back of strong earnings to close out the month down -4%. Losses were steepest in Real Estate and Information Technology, not surprising given the back-up in yields having the biggest impact on rate sensitive sectors. For the year, the S&P 500 remains higher by almost 6%.
With 64% of companies having reported earnings for the first quarter of 2024, almost 80% have exceeded analysts’ expectations. For the full year, given the better than anticipated results thus far, operating earnings for the index are now expected to grow 13.3% over 2023. This continues to be a key theme guiding our positive outlook for equities.
Steady Economic Growth
Steady Economic Growth
Steady Economic Growth
Highlights
Equity Markets
The equity markets took a breather in April following the extraordinary rally since the lows in October of last year. Performance during the month was choppy as economic data and a repricing of the likelihood of the Federal Reserve cutting interest rates this year. The month began with three negative weeks in a row, with the index falling -5.5% to an intramonth low on April 19th. This drop was mostly attributed to the hotter inflation readings and hawkish speaking engagements from members of the Federal Reserve. The market rebounded in the final week of April on the back of strong earnings to close out the month down -4%. Losses were steepest in Real Estate and Information Technology, not surprising given the back-up in yields having the biggest impact on rate sensitive sectors. For the year, the S&P 500 remains higher by almost 6%.
With 64% of companies having reported earnings for the first quarter of 2024, almost 80% have exceeded analysts’ expectations. For the full year, given the better than anticipated results thus far, operating earnings for the index are now expected to grow 13.3% over 2023. This continues to be a key theme guiding our positive outlook for equities.
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