The U.S. stock market saw a decline in April after five consecutive months of gains, raising concerns about rising inflation and potential restrictive monetary policies by the Federal Reserve. Despite positive first-quarter earnings reports, major indices like the S&P 500, Nasdaq 100, and Dow Jones all ended the month in negative territory.
S&P 500 closed 4% lower, marking its worst performance since September 2023. The Nasdaq 100 witnessed a 4.4% decline, while the Dow Jones fell 4.9%, its lowest performance since September 2022.
Nearly half of S&P 500 companies reported positive EPS surprises, but March’s inflation reports were a reality check. The Consumer Price Index showed a surge in price pressures, with annual PCE inflation exceeding forecasts. Core PCE inflation also surpassed predictions.
2-year Treasury yields closed above 5%, reaching the highest levels since November 2023. Investors are now bracing for the impact of potential hawkish shifts in inflation policies by the Federal Reserve.