US stocks gained in April as investors worked through mixed economic data. With about half of S&P companies having reported Q1 earnings, 79% of companies reported earnings per share that beat estimates, their best performance relative to analyst expectations since Q4 2021. Economic news was mixed over the month. U.S. employers added 236,000 jobs in March, slightly below the 238,000 estimate and below the upwardly revised 326,000 new hires in February. The unemployment rate fell to 3.5% from 3.6%. The producer-price index increased by 5% annually in March extending the cooling trend. CPI increased 5% annually in March, slightly lower than the 5.1% increase expected. Core CPI, which excludes food and energy, climbed by 5.6% as expected. The personal consumption expenditures index, the inflation gauge the Fed prefers, was up 4.2% annually in March, down sharply from a 5.1% increase in February, but higher than the 3.7% estimate. US retail sales dropped by 1% in March, posting a decline for a second straight month. U.S. existing-home sales declined by 2.4% in March, the biggest annual decline in 11 years. US GDP rose at a 1.1% annualized pace in the first quarter, below the 2% estimate and the fourth quarter rate in which GDP climbed 2.6%.
Foreign stocks posted gains in March as global recession fears cooled. The Eurozone headline inflation rate fell to 6.9% in March down significantly from 8.5% in February. Eurozone core inflation, which excludes food and energy, accelerated to 7.5% in March from 7.4% in February. Stubbornly high core inflation has European Central Bank policymakers stating that interest rates will need to keep rising and plan to raise rates again at it’s May meeting. The U.K.’s annual inflation rate rose 10.1% annually in March, above expectations. This follows the unexpected jump to 10.4% in February, which broke three consecutive months of declines. The Bank of England is expected to raise interest rates in May to 4.5%. China’s economy expanded by 4.5% in Q1 compared with a year earlier, above the 4% pace expected by economists. Oil prices increased in April, ending the month at $76.78, up from $75.76 per barrel in March. Emerging markets have trailed developed markets over the month, year to date and the last twelve months.
Interest rates fell in April as investors moved to safety amid the turmoil in the banking industry. The yield on the 10-year Treasury sharply decreased in April ending at 3.45%, down from 3.91% at the start of the month. The Federal Reserve is expected to raise the federal funds rate by 0.25% at its May meeting. Fed officials have signaled they will pay close attention to measures of economic activity, including lending conditions following banking-system stress, when making future rate decisions. The rate for a 30-year fixed-rate mortgage increased to 6.4% at the end of April up from 6.3% to end March. US credit bonds were the top performer for April and the year to date, while corporate bonds were the top performer for the last twelve months. Longer-term bonds outpaced shorter-term bonds for April, the year to date, and the last twelve months.
|Index Performance||April||Year to Date||Trailing 12 Months|
|US Stocks (Russell 3000)||1.07%||8.32%||-2.10%|
|Foreign Stocks (FTSE AW ex US)||1.82%||8.50%||4.45%|
|US Bond Mkt. (BBgBarc Int. Gov/Cred)||0.61%||2.96%||0.64%|
|Municipal Bonds (BBgBarc 1-10 Yr Muni)||-0.38%||1.46%||2.97%|
|Cash (ICE BofA ML 3-Mo T-Bill)||0.33%||0.64%||2.10%|