Mid-Week Market Minute 5.01.24

Market Updates

Stocks Slip to Close Tough April; Labor Data on Friday

Stocks slipped in early trading this week, closing the door on a tough month of April for both stocks and bonds. For the month, the S&P 500 was lower by 4% in total return, fueled by the recent decline in tech stocks. In small caps, the Russell 2000 index fell more than 7% in April and dipped into negative territory year-to-date. Despite a stronger dollar, international developed and emerging market stocks both outperformed their U.S. counterparts. The MSCI EAFE index fell about 2.3%, while emerging market stocks managed a positive return of about 1% for the month as China’s experienced nearly a 7% rally for the month. Higher rates weighed on bond investors as the Bloomberg Aggregate index lost about 2.5% in total return in April.

Earnings remain at the forefront, and despite the recent volatility continue to look relatively strong on average. Shares of market heavyweight Amazon rallied following a strong earnings report on Tuesday after the close. Meanwhile, consumer-sensitive stocks like McDonald’s and Starbucks fell this week after missing earnings forecasts and cutting forward guidance amid slowing sales.

Outside of earnings, investors will shift their attention back to the economy and interest rates as Fed Chair Jerome Powell is scheduled to speak following the conclusion of the FOMC’s policy-setting meeting on Wednesday afternoon. With recent inflation data running hotter than expected, the Fed is widely expected to leave interest rates unchanged, and the policy decision itself is essentially a non-event. However, the markets will listen closely to Powell’s news conference for any indication into the future path of policy and their views on inflation. Separately, Friday will bring the closely watched nonfarm payrolls report for insights into the labor market, which continues to show impressive strength. Expectations are for the U.S. economy to have added approximately 240,000 jobs in April, with the unemployment rate holding steady at 3.8%.

Source: GSAM, CNBC, JPMorgan

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