April market recap: Stocks simmer in mild month

April market recap: Stocks simmer in mild month

05.05.2023

In the wake of the Silicon Valley Bank failure, and ahead of a potential debt ceiling showdown, capital markets were relatively calm in April. Stocks and bonds finished moderately higher as investors maintained their expectations that the Fed would pursue one more 25bp rate hike before pausing and ultimately beginning a descent toward the end of this year.

With about half of the S&P 500 reporting so far, blended earnings are on track to decline by 3.7%, according to FactSet.1 While this would mark a second straight quarter of declines, it is largely better than expected. A dreaded “earnings cliff” failed to materialize. Results from most of the mega-tech companies were particularly impressive, helping drive outperformance from growth and large cap. Small cap stocks as measured by the Russell 2000 were down for the month.

How the debt ceiling may impact investors

Regarding the debt ceiling, the good news is that the important political figures are starting to comment on it. In our view, if the key players are well known to the public, they will have greater incentive not to let the situation derail. We continue to believe there is a small but very real possibility that the U.S. may technically default. However, we expect that if that were to occur, a resolution would be reached within days, not weeks, and that all investors would be made whole. Still, we may see increased volatility as we approach a deadline. The specific date the government will run out of funds is still unknown but could be as early as June.

RO2910417-0523

1 FactSet, "Earnings Insight," April 2023.

Craig Birk, CFP®

Contributor

Craig Birk is the Chief Investment Officer for Empower Personal Wealth. A CERTIFIED FINANCIAL PLANNER™ professional, he is responsible for Empower’s retail investment portfolio, providing strategic and executive direction to drive the optimal management of client assets.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Compensation for freelance contributions not to exceed $1,250. Third-party data is obtained from sources believed to be reliable; however, Empower cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third-party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Empower of the contents on such third-party websites.

Certain sections of this blog may contain forward-looking statements that are based on our reasonable expectations, estimates, projections and assumptions. Past performance is not a guarantee of future return, nor is it indicative of future performance. Investing involves risk. The value of your investment will fluctuate and you may lose money.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.