April 2024 Monthly Recap
Market Snapshot
*As of 04/30/2024
By the Numbers
  • Despite softening in April, the S&P 500 index, Dow Jones Industrial Average, and Nasdaq show gains of 5.57%, 0.34% and 4.31% year to date, respectively. 
  • The average yield on U.S. investment grade corporate bonds is now 5.5%, far more attractive than the average of 3.7% since 2009.
  • The Fed’s preferred measure of inflation, the Personal Consumption Expenditures index, rose 2.40% on a year-over-year basis for all prices and 3.31% when excluding food and energy. 
  • The unemployment rate rose slightly to 3.9% in April, rekindling stock growth in the hopes of potential Fed rate cuts.

The stock market became increasingly jittery in April with the S&P 500 experiencing its first 5% pullback of the year. The possibility the Fed could delay its first rate cut, declines in technology and artificial intelligence stocks, and tensions in the Middle East have all contributed to the April market swoon. In uncertain market environments such as these, investors should remember that short-term market declines are a natural part of investing.

First, of the many factors driving markets today, perhaps the most uncertain is the impact geopolitical conflicts could have on the price of oil. The world is still highly dependent on oil with a global demand estimate of 102 million barrels per day in 2023 according to the International Energy Agency. Thus, oil is a way for geopolitical instability to be transmitted to the global economy since conflicts can disrupt oil production and supply chains, driving prices higher. Perhaps most importantly in today’s economic environment, rising oil prices can lead to higher inflation, impacting consumers, Fed decision-making and interest rates. Thus, oil remains a wildcard when it comes to monetary policy and the timing of the Fed’s first rate cut.

However, history shows that while geopolitics can impact markets, the effects are typically short-lived. The accompanying chart highlights market returns following major geopolitical events this century. Some events, such as 9/11, changed the world order and had long-lasting effects, even though it was primarily the dot-com bust that led to poor market performance. Other events, such as the war in Ukraine, resulted in higher oil prices which affected inflation and monetary policy. Most of these events did not have long-lasting effects on markets once the situation stabilized.

Sources: Clearnomics, Standard & Poor’s
© 2024 Clearnomics, Inc.

Second, all eyes remain on the Federal Reserve’s plans for rate cuts.  Stronger than expected inflation data in April collided with weaker than expected job growth; this disjointed data did little to reduce the collective hand-wringing of the markets. We remain confident the Fed will begin reducing rates later in 2024 which is the key theme in our view – efforts to predict the exact timing and magnitude seem a heavy pre-occupation for short-term traders but will prove largely irrelevant for long term investors. There are still risks to the Fed’s outlook and the monthly inflation numbers, especially if oil prices rise further due to geopolitical conflicts. However, even if this were to occur, inflation is far more manageable today and no longer requires an emergency monetary response.

The views expressed represent the opinions of Tiller Private Wealth as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed. 

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website. Past performance is not a guarantee of future results.

The market indices discussed are unmanaged. Investors cannot directly invest in unmanaged indices.

The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The market index is unmanaged.

The NASDAQ Composite Index is an unmanaged, market-weighted index of all over the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

Data sources: Clearnomics, YCharts, BankRate, FRED St. Louis Fed, Treasury Department, & US Federal Reserve.