May 2, 2024

The S&P 500 Index declined 4.1% in April, giving back some of its generous first quarter gains.  Volatility rose, and yields climbed, as investors re-priced their expectations on Federal Reserve rate cuts after stubborn inflation readings and questions on the growth narrative sparked “stagflation” (an environment in which the economy decelerates and/or contracts, coupled with upside inflation pressures and a rise in unemployment fears). Just one month prior, confidence was high for three rate cuts beginning in June, but has since shifted to perhaps one cut later in the year – pushing out the anticipated easing cycle. Real Estate (-8.5%) and Health Care (-5.1%) were the worst performing S&P sectors, while the Utility sector (+1.65%) was the only sector achieving a positive return in April.  Large-cap stocks outperformed mid-cap and small-cap stocks during the month, although there was not a lot of difference between growth and value from a style perspective.