Author: Ryan Frydenlund

Ryan Frydenlund

April Market Commentary

Market Commentary

US stocks surged in April posting their best month since November on optimism over the economic recovery and a jump in corporate earnings.  With roughly 75% of S&P 500 companies reporting earnings to date, over 80% of companies have beaten analysts’ estimates. The vaccination rate continues to grow with roughly 45% of the US population vaccinated and new COVID-19 cases at their lowest level in months.  Economic news in April reflected a growing economy.  The March jobs report showed 916,000 new hires and the unemployment rate fell to 6%. Initial unemployment claims reached a post pandemic low.  Factory and service sector activity surged.  US auto sales are nearing levels seen before the pandemic and retail sales in March jumped 9.8%.  Reflecting the recent economic acceleration, consumer prices rose 2.6% in March over the past year.  US GDP grew at a 6.4% rate in the first quarter bringing the economy within 1% of the level it reached prior to the pandemic.  Household income soared 21.2% in March driven by stimulus payments.

Foreign stocks climbed on expectations of a continued economic rebound, but COVID-19 continues to be a significant problem globally with surging cases in Japan, Brazil, and India.  The European Union (EU) has struggled to vaccinate its population with only 21% of its citizens receiving at least one vaccine to date, but the EU is targeting having 70% of its population vaccinated by July.  The European Central Bank (ECB) left their benchmark interest rate and bond buying program unchanged after their April meeting and said they would likely remain supportive longer than the Fed.  Economic numbers are improving with Eurozone factory activity growing at its fastest pace in over two decades.  OPEC and others affiliated with the group agreed to increase oil production by over two million barrels a day on expectations of an economic rebound.  China reported first quarter growth of 18.3%, a record, putting it well ahead of its 6% targeted pace for the year.  Emerging markets trailed developed markets over the month and year to date, but outpaced developed markets over the trailing twelve months.

Bonds saw gains over the month as interest rates took a step back.  Minutes from the Fed’s March meeting showed the group continued to remain dedicated to supporting the economy and was not concerned with the potential for inflation.  At their April meeting they left their policies unchanged.  Fed Chair Powell said the Fed would cut bond purchases “well before” raising the Fed Funds Rate. The 10-year Treasury yield ended the month at 1.65% down from 1.74% to start the month.  Credit bonds led the way over the month and year to date.  Longer term bonds topped shorter term bonds in April, but shorter term bonds have outpaced so far in 2021.

Index PerformanceAprilYear to DateTrl. 12 Months
US Stocks (Russell 3000)5.15%11.83%50.92%
Foreign Stocks (FTSE AW ex US)3.01%6.89%44.43%
US Bond Mkt. (BBgBarc Int. Gov/Cred)0.50%-1.37%1.09%
Municipal Bonds (BBgBarc 1-10 Yr Muni)0.42%0.21%5.03%
Cash (ICE BofA ML 3-Mo T-Bill)0.00%0.03%0.11%

Financial News and Portfolio Management Discussion through May 8th

US stocks ended the week at new all time as the weak jobs report pushed back investors’ expectations for any changes in policy by the Fed. The S&P 500 gained 1.3% and the Dow surged 2.7% for the week. Abroad, the FTSE All World Ex US climbed 1.9% for the week. The yield on the 10-year Treasury yield fell over the week to finish at 1.58% down from 1.65%.

US Job growth dropped sharply in April with 266,000 jobs added. Well below the 1 million jobs expected. In addition, March’s hiring level was revised down. The unemployment rate rose to 6.1% in April from 6.0% in March.

The ISM purchasing managers index for April showed growth, but fell short of expectations.

With 85% of companies in the S&P 500 reporting earnings to date they collectively have seen a 50% increase in profits compared to the first quarter a year ago.

Financial News and Portfolio Management Discussion through May 1st

US stocks were flat for the week as optimism over the economy was balanced but concerns about global coronavirus infection rates. The S&P 500 was up 0.04% and the Dow fell 0.5% for the week. Abroad, the FTSE All World Ex US was down 0.4% for the week. The yield on the 10-year Treasury yield was climbed over the week to finish at 1.65%.

The EU has struggled to vaccinate its population with only 21% of its citizens receiving at least one vaccine to date, but the EU is targeting having 70% of its population vaccinated by July. India is also currently seeing a massive wave of new infections.

At the Fed’s April meeting they left their benchmark interest rate unchanged and said they plan to continue to support the economic recovery.

US GDP rose 6.4% in the first quarter bringing the economy within 1% of the level it reached prior to the pandemic.

Household income soared 21.1% in March driven by stimulus payments.

With 30% of S&P 500 companies reporting earnings to date, 88% have beaten estimates.

Financial News and Portfolio Management Discussion through April 24th

US stocks were flat for the week as optimism over the economy was balanced but concerns about global coronavirus infection rates and a possible capital gains tax increase. The S&P 500 ticked down 0.1% and the Dow fell 0.5% for the week. Abroad, the FTSE All World Ex US was off 0.3% for the week. The yield on the 10-year Treasury yield was unchanged over the week remaining at 1.57%.

India and Japan are seeing a significant new wave of coronavirus infections.

A preliminary proposal from the Biden administration outlined that the capital gains tax would be increased to 39.6% for those making more than $1M.

Initial weekly unemployment claims fell to a post pandemic low of 547,000.

The ECB left their benchmark interest rate and bond buying program unchanged after their April meeting and said they would likely remain supportive longer than the Fed.

IHS Markit’s US services index jumped in March signaling the fastest expansion in service sector activity since at least 2009.

New home sales rose 20% in March from February.

Of the companies that have reported earnings to date 81% have topped earnings estimates and 84% have topped revenue estimates.

Financial News and Portfolio Management Discussion through April 17th

US stock continued to grind higher setting new record highs on strong economic news and earnings reports.  The S&P 500 was up 1.4% and the Dow gained 1.2% for the week.  Abroad, the FTSE All World Ex US gained 1.6% for the week.  The yield on the 10-year Treasury yield fell again for the week to settle at 1.57%.

The CPI rose 2.6% for the year ending in March, a notable pick-up inflation, however without the volatile food and energy sectors inflation increased 1.6%.

Health officials recommended pausing use of the Johnson and Johnson vaccine.

Fed Chair Powell said the Fed would cut bond purchases “well before” raising the Fed funds rate.

China reported first quarter growth of 18.3%, a record.

US retail sales jumped 9.8% in March, the largest gain since last May when the country first began recovering from the pandemic.

First time applications for unemployment benefits fell to 576,000 over the past week, the lowest level since the pandemic began.

Large banks including Wells Fargo, Goldman Sachs and JP Morgan reported earnings that significantly topped expectations.

Analysts project the S&P 500 companies will increase first quarter earnings by 27% from a year ago.