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Markets in April 2024 Thumbnail

Markets in April 2024

Markets in April

  • April was a tough month for both equity and fixed income markets as inflation remains sticky. The S&P 500 was down 4.1%, and more interest rate sensitive sectors such as small caps and real estate were down even further, -7% and -8.4% respectively. Technology was the second worst performing sector falling 5.8%. 
  • Both CPI and Core CPI rose 0.4% in March over the month. This pushed the Core annual inflation rate up to 3.8%. Even worse is that if you annualize the last three months of inflation data, it’s running at a 4.5% rate. This data reduced the expectations of rate cuts pushing the 2yr Treasury back above 5% and the 10yr to almost 4.7%. The U.S. Aggregate Bond Index was down 2.5% in April. 
  • Q1 GDP slowed to 1.6% compared to 3.4% in the previous quarter and below forecasts of 2.5%. However, consumer demand is still showing resilience and is expected to contribute to a higher Q2 print.
  • Although higher than anticipated inflation, as well as slightly slower economic growth have caused many pundits to begin ringing the stagflation alarm. The economy is far from it and corporate America is showing that with impressive Q1 earnings. About 80% of companies have reported with earnings currently tracking 5% growth, with 77% of companies beating estimates. Big Tech is again leading in this department and without the Tech sector earnings would be down 2.6%.

Why It Could Keep Going Higher


  • The primary driver of U.S. economic growth is the U.S consumer and most Americans are fully employed and enjoyed significant wage gains over the past couple years. Most with low debt service costs. 
  • Inflation continues to decelerate, albeit slowly and the Fed has signaled that they plan cutting rates sometime this year. 
  • Earnings are expected to grow between 8% - 12% in 2024. 
  • There is a lot of cash on the sidelines and investors may put it to work on the fear of missing out.

Biggest Risk

  • Inflation and the Fed’s response to get it under control are still the biggest risks the economy faces currently. Fed policy impacts the economy with a significant lag so it is hard to determine what the future effects will be from the current rate hikes.
  • Valuations are stretched and if earnings do not live up to expectations, a sell-off could occur.
  • Some research reports indicate that excess savings accumulated during the pandemic may have already been depleted or will be in the near future. Student loan payments also just began again in October. 
  • Credit card debt is reaching an all-time high, delinquency rates are rising on auto loans and credit card balances, and we’re starting to see an increase in bond defaults. 
  • If the economy does begin to slow down, high wage costs may force employers to lay off workers to maintain profit margins. 
  • Additional bank failures and commercial real estate defaults.
  • Further Geopolitical tensions.

Economic Data


  • Producer Price Index came in at 2.09%, the first time above 2% since April 2023.
  • 303k jobs were added in March, significantly beating expectations of 200k. 
  • 175k jobs were added in April below the 243k expected, with unemployment rate at 3.9%.
  • U.S. Personal Spending increased 0.8% in March.
  • Real Disposable Income rose 0.2%. 
  • Retail Sales rose 0.7% in March above expectations. 
  • ISM Manufacturing PMI fell back into contraction at 49.2.
  • ISM Services PMI dropped sharply to 49.4 in April, reflecting the first contraction in the services sector activity since December of 2022.


What We Are Doing


Markets finally gave way to the pressure of sticky inflation preventing the Fed providing rate cuts as early as previously expected. We have been expecting volatility to pick up at some point and used some of the sell-off to add to both equities and fixed positions, mostly in some of more conservative allocations.

So far, the economy is still holding up well and earnings should continue to improve at least for the immediate future. Our overweight allocations in US large cap stocks and underweight in investment grade fixed income have allowed us to outperform our diversified benchmarks so far YTD.

Although, we continue to expect more volatility ahead we would see any market pull backs as a buying opportunity rather than the start of a significant bear market. We will continue to watch the economic dynamic carefully to take advantage of opportunities as they present themselves.