Worst Month Since October 2022

May 1, 2024

April is traditionally one of the better months of the year for stock market performance, but after 2 consecutive quarters with double digit gains this April was different.  We did see the large last-minute inflow of funds into IRAs that typically help the market, but a 25% rally in just 5 months to a new all-time high prompted some to take profits during the month. One of the main market drivers has been the belief that the Federal Reserve was not only done raising interest rates but would begin dropping them this year.  Over the past few months economic and inflation numbers have been stronger than expected, which is putting that thesis into doubt.  Artificial intelligence enthusiasm continued to drive many tech stocks but a 5-month high in interest rates weighed on the overall market.  At the end of the month the S&P 500 was down 4.2% but is still up 5.6% for the year.  Interest rates, as measured by the 10 -year Treasury jumped 10% during the month while oil prices edged 2% lower.  Gold has been on a tear, hitting an all-time high during the month but closing with a gain of just 3%.

The month began with interest rates moving higher and stocks moving lower on concerns the Federal Reserve would not be cutting rates this year as expected. At the end of the week the government reported a much stronger than expected 303,000 new jobs were added in March which put more upward pressure on interest rates and sent the S&P 500 down 1% for the week.  The first 2 days of the following week were quiet as it seemed everyone’s attention was focused on the solar eclipse.  Mid-week we learned CPI was up 3.5% year over year which was the strongest increase in inflation in 6 months and on Friday investors sold stock on concerns about Iran attacking Israel over the weekend.  The week ended with the S&P 500 down another 1.6%.  Over the weekend Iran did attack Israel, but the Israelis were able to turn away the attack.  There was a brief relief rally at the open on Monday before the selling continued.  During the week we saw several rally attempts, but sellers were there each time, sending the S&P 500 down 3% for the week, its worst weekly performance in 5 months.  The last full week of the month saw easing of tensions in the Middle East and several strong corporate earnings reports.  A troubling report on GDP late in the week put some pressure on stocks but the week was driven by those seeing value after 3 weeks of declines and the S&P 500 ended the week with a gain of 2.7%, its best weekly performance in 5 months.  The month ended in the red for the first time since October.

“Sell in May and go away.”  The often-quoted phrase harkens back to a time when money managers would reduce market exposure before heading off on summer vacation.  These days we are all “connected” 24/7 so the need to sell ahead of a vacation no longer exists.  Regardless, the quote is repeated every year and May is still traditionally one of the worst performing months for stocks.  The Middle East continues to be in focus, but interest rates are likely to play a stronger role.  If we were to see a decline in inflationary pressure, we would expect the market to react favorably, but continued pressure on rates could weigh on stocks. Earnings are what drives the market, and we are going to see a flood of them in May. We took advantage of the selling in mid-April to put some cash to work and reduce our hedge and we will do more of that on any significant market weakness.

If you know someone who would be interested in learning more about Greenberg Financial Group, please contact us at 520-544-4909, or visit our website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio, follow us on Twitter @gbergfinancial or on Facebook under Greenberg Financial Group.  Previous radio shows are available by going to www.iheart.com or using the iHeart app and typing Money Matters with Dean Greenberg.