April brought no relief for the stock market, as all major indices were down for the month. The S&P 500 produced an 8.7% decline as volatility broke the hiatus taken in the first half of April, courtesy of first quarter earnings season.
While it seems the market was caught flat-footed by a first-quarter GDP print of -1.4%, marking the worst quarterly result since the second quarter of 2020. The sharp deceleration was primarily due to reductions in exports and inventory spending. Consumer spending, which typically accounts for 70% of the US economy, continued to grow at a steady pace. This suggests that economic fundamentals are healthier than the GDP print indicates.
Declines in fixed income persisted, as expectations of rising interest rates eroded bond prices, pushing yields higher.
International developed and emerging market equities struggled, although producing tempered declines in comparison to U.S. equities as investors evaluate the lockdown in China.
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