April Market Recap
April Markets were quite tame relative to the volatility we had been experiencing in the past year. The CBOE S&P 500 3 Month Volatility Index has been trending down since its May 2022 highs when inflation seemed to be getting out of control. For those who are unfamiliar with the VIX, the VIX is known as the Volatility Index of the US S&P 500 index. The higher the VIX, the more volatility within the price of stocks. When the VIX trends lower, the Market tends to be moving higher.
*The following Chart was provided by the St Louis Federal Reserve for the 3-month Volatility index from 05-01-2022 to 04-28-2023
Another headline number we received in April was the first quarter of GDP (Gross Domestic Product). GDP is a measure of all the goods and services that were produced by the United States. We look for whether we have positive GDP (Did we produce more goods and services than last month, quarter, or year?) or negative GDP (Did we produce less). This past quarter, GDP rose by 1.1% (relative to last Q4 2022). This was less than the expected 2% of economists surveyed by Dow Jones had been expecting. Surprisingly, the market took this number well as this discrepancy came from companies easing excess inventory build-up from the supply chain issues of 2021 and 2022.
Corporate earnings are coming in with surprises. Large Technology companies are coming in with plenty of surprise beats which has helped cool some of the volatility in the markets.
What does this mean for us investors? Things aren’t as bad as expected. Corporate Earnings are coming in better than expected. Volatile markets seem to have cooled down over the past 3 months. GDP remains positive for Q1. Now, we must see what the federal reserve’s next move is.