M&A April 2022 Update

M&A April 2022 Update

April 10, 2024

April 9, 2024

Stock market prices rose this year through the end of the First Quarter. The S&P 500 and Dow indexes rode a resilient U.S. economy. The pace of inflation eased despite a fifth straight month of rising prices. Corporate profits rose. And then stock prices fell the first four days of last week, as the likelihood of Federal Reserve summertime rate cuts began to fade. On Wednesday last week, Chair Powell said:

“On inflation, it is too soon to say whether the recent readings represent more than just a bump. We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2 percent. Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy.”https://www.federalreserve.gov/newsevents/speech/powell20240403a.htm.

Early last week, the Federal Reserve Bank of Atlanta estimated first quarter GDP would come in at 2.8%, up from an earlier expectation of 2.3%. https://www.atlantafed.org/cqer/feature/2024/04/01-gdpnow. Hotter economic growth could serve to extend the timeframe for a “higher for longer” U.S. interest rate environment. Last Thursday, the Dow closed 500 points lower, its fourth straight losing session. And then Friday’s US Jobs Report sent the stock markets soaring again. Flatter yesterday, in advance of tomorrow’s expected Consumer Price Index.  

 

A sharply lowerinflation rate, healthy job market, and record high stock market offset by rising gold and oil prices, accelerating concerns about artificial intelligence amid polarized and sometimes paralyzing domestic and global politics, with ongoing U.S. and global rate uncertainties: all are contributing to ongoing market volatility. We don’t see any reason to expect lower volatility as this election year continues to unfold. In anticipation of tomorrow’s key inflation report, US stocks traded lower again this morning. With bonds rebounding after a recent selloff.

 

Solid fundamentals̶̶-and financial market history-suggest staying the course. Here’s one of many articles documenting how staying invested ordinarily beats trying to time the market: https://www.morningstar.com/portfolios/staying-invested-beats-timing-marketheres-proof.

 

Even if the U.S. dodges an election-year recession, we still think it’s sensible to anticipate ongoing stock market volatility. Consider the potential impacts of these uncertainties:

Yet our economy remains resilient, businesses and consumers are still spending, and U.S. financial markets still expect a “Goldilocks” soft landing while the world watches and waits for November outcomes.

 

Whether your investment goals are capital appreciation, income, or wealth preservation, volatility presents opportunities as well as risks.

 

As always, please reach out to us with questions.

 

Sincerely,

 

Ann L. MacNaughton