Market Musings 5/3/2024

Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!

The S&P 500 fell -4% in April as investor concerns over #RateCuts mount with higher inflation data. Entering May, markets seem more reassured that #RateCuts are still coming just delayed.

🌧️ April Showers

Markets finally gave up some gains in April after the S&P 500 had rallied +25% since last October. Markets have been incredibly resilient this year despite overly optimistic #RateCuts expectations quickly dissipating.

The new inflation data continues to show higher growth and marks the third straight month of stickier inflation. Multiple Fed officials, including Powell, noted the data was concerning and driving less confidence that inflation was making its way back to the 2% target.

💐 May Flowers?

Markets received an early jolt in May with the latest Fed meeting ending on the first of the month. While the Fed cautioned that confidence in inflation progress would take longer, investors took comfort in Powell’s still dovish stance that rates hikes wouldn’t be needed with rates sufficiently restrictive at these levels and that the Fed will begin easing its balance sheet reductions.

Looking forward, markets are wrapping up the earnings season with important #AI earnings and outlooks still on tap. In addition, we expect a lot of focus on the next CPI and PPI reports in hopes of seeing the recent higher inflation growth reverse.

Despite some market expectations resetting with a red month, we still wouldn’t be surprised to see more caution especially heading into the seasonally slower summer months. We’re likely in for more volatility in the near-term as markets recalibrate expectations with every #AI earnings outlook and new inflation report.

We believe markets are too optimistic expecting the ideal #Goldilocks soft landing and still expect a mild recession towards the end of the year. However, longer-term, we still believe we’re already well into the next bull market. We recommend using any market pullbacks to add to portfolios.

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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.

Original Photo by Lum3n.