April 2023 Market Review & Commentary
We hope you are doing well, and we hope you are enjoying the current weather just as much as my lawn is. Every Spring begins with me getting way too excited about how amazing our lawn looks, due to all the rain, only to watch the Virginia summer sun, our bulldogs and Channing’s pitching wedge slowly destroy it. I am always hoping that we might get a mild Virginia summer, but over the last 20 years, there have been very few.
Just as I am awaiting the future fate of my lawn over the next 6 months, the markets and investors in April continued the waiting game on the market to see actual effects of all Federal Reserve rate increases that have come over the last year. The month of April began with everyone continuing to digest the banking woes and we continued to hear about the slowing economic data in industrials, manufacturing, housing, and the potential tightening of credit markets. These headlines, along with no real major economic events beyond earnings, simply pressured the markets down as we entered the first quarter earnings season during the back half of the month.
With so much interest rate pressure implied and applied by the Federal Reserve over the last two quarters, many earnings and profit estimates were lowered. This reduction of expectations allowed many companies to provide decent reports. As we moved into the late stages of the month, 79% of reporting companies within the S&P 500 beat estimated profits, which allowed investors and markets to feel reasonably ok that the economy is still on good footing. Coupling the decent earnings calls along with declining inflation reading and strong employment data, the markets were able to scratch out a positive return. The Nasdaq Index grew by +0.04% in April along with the S&P 500 gaining +1.46%. The winner for the month ended up being the DOW Jones Industrial which posted a positive +2.48%, but this index has been the laggard with a total year to date return of only +2.86% including the nice April return.
As we look forward, our attention will be on the looming Debt Ceiling, the continued fluidity of the credit markets, employment data and the overall health of the US Economy. These areas are my equivalent to the Virginia Sun, the bulldogs and Channing’s pitching wedge.