Stocks continued their upward momentum in April, finishing the month with another solid gain.
The S&P 500 (SPY) was up 2% in April.
The tech-heavy NASDAQ 100 (QQQ) gained 1% in April.
The Vanguard Global Stock Market (VT) was up 1% in April.
The solid performance in April added more gains to the year.
The S&P 500 is up 8% in 2023.
NASDAQ 100 is up 20% in 2023.
The Vanguard Global Stock Market is up 7% in 2023.
Why Were Stocks Up in April?
I see a few key catalysts that drove stocks higher during the month of April.
Inflation getting better: the sad reality is that inflation is probably going to remain elevated for at least a few years. Hopefully this isn’t the ‘new norm’. However – in the short run inflation is headed in the right direction and we see that in the latest inflation data. Here are some more details from AP.
“Friday’s data did include some encouraging signs regarding inflation: Overall prices ticked up just 0.1% from February to March. That was the smallest monthly rise since last July and was down from a 0.3% increase from January to February. And compared with a year ago, inflation slowed to just 4.2%, though much of that decline reflected lower gas prices, which are particularly volatile. That is the lowest year-over-year overall inflation figure in nearly two years.”
Q1 earnings were better than expected: Earnings season is the most important time of the quarter for the stock market – Q1 earnings season happened in early April. This is when companies report earnings and share a forecast on future business. Analysts weren’t expecting great Q1 results – and the results ended up coming in a little better than expected.
Banks reported strong earnings. Big tech delivered strong earnings. Big tech has been on a cost cutting binge in last year and its working. These companies are seeing better margin strength and its leading to better earnings. Here’s a link to a report with more details.Q1 earnings good enough but not great
What Should We Expect Looking Forward?
In the short run we are heading into a quieter period of the year for the stock market. Historically speaking, volatility dies down in May, June and July. That makes sense – summer is when families take vacations and that includes the big players on Wall Street that really control market action.
As always, I am still expecting to see volatility. But I view any weakness in the stock market as an opportunity to deploy cash. Stocks are off to a good start this year and I expect that to continue into the end of the year.
Disclaimer: This is not investment advice. This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.
