May 4, 2024 Market Update

The U.S. stock market rebounded for a second week, rising 0.6%, based on the S&P 500 Index.  The rally was mild but a welcomed recovery from earlier in the week when equities sold off sharply.

U.S. Treasury yields dropped on Friday after April’s jobs report showed weaker-than-expected payrolls growth and an unexpected tick higher in the unemployment rate.  Friday’s weaker-than-expected gain for U.S. payrolls has revived expectations for rate cuts amongst some bond traders.  The release of consumer inflation data for April on May 15th could provide insight on the trajectory of both the stock and bond markets in the weeks ahead.

April marked the first monthly decline in 2024 for the stock market, with all three major U.S. indexes recording losses for the first time since last October.  The Dow saw its sharpest monthly drop since September 2022, shedding 1,991.45 points or 5%.  The broad market, represented by the Vanguard Total Stock Market Index Fund ETF (VTI) declined too, by 4.3%.

April was a tough month for bond investors too, as strong inflation and economic data in the U.S., and elsewhere led to higher yields and lower prices.  The Vanguard Total Bond Market Index Fund ETF (BND) declined by 2.4%.  The rise in 10-year U.S. yields was the greatest since September, finishing the month at 4.6%.  This significant increase primarily stems from diminished expectations for rate cuts by the Federal Reserve.  Initially, many anticipated up to five or six cuts in 2024, but the consensus has shifted to just one or two by year-end.

Emerging market stocks, commodities, U.S. Treasury bonds with remaining maturities one year or less and gold posted positive returns last month.

That’s all for now.  Have a great weekend and invest wisely, my friends.