The Markets – The S&P 500 index finished April +4.50% the Dow +2.66% for the month and the NASDAQ finished the month +4.74% according to the Wall Street Journal. Following the first quarter which saw one of the strongest market gains in history April was very strong for the US markets. Year-to-date numbers are: +14.79% for the Dow, +22.01% for the NASDAQ, and +18.25% for the S&P 500. The US Core Bond market lost .03% in April but clocks in at a comfortable +2.95% year-to-date according to Morningstar.
Trade Wars: Hopes that a U.S. China trade deals will soon be announced seem to boost sentiment throughout the month adding to the fact that the head of China’s central bank pledged that China would not devalue its currency to boost exports or to use it as a weapon in trade disputes. Late in March, U.S. President Donald Trump told an interviewer that the two sides were “getting very close” to a trade deal with China, as U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven conduct face to face talks. Mnuchin’s tweet that the talks had been constructive seemed to be one factor in the market’s strong rally on March 29, the last trading day of March which carried over into April.
Overseas: Following news of a steep contraction in the German manufacturing sector in March, growth numbers from Spain and Italy surprised to the upside which helped to lift much beleaguered European markets.
Fed Watch: Signs of an increasingly dovish turn in monetary policy at the meeting in March seemed to allay growth concerns and support markets while stocks appeared to get a boost from the summary of individual policymakers’ economic and policy projections released after the late March meeting—most notably, 11 of the 17 Fed officials who set policy now expect no rate hikes in 2019, while four expect just one. Markets appear to be pricing in a significant chance of a rate cut in 2019.
Driven in part by the Fed’s dovish tilt, we experienced a partial inversion of the yield curve in March however, the yield curve began to tilt slightly upward again throughout April, which may have been another factor helping stocks hit a high note during the month.
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