By Rick Schwerd |
Our investment team remains committed to sharing updates and market insights to keep you informed. Please look for our next update on May 1.
Markets Surge in April
Stocks have looked past the current Middle East situation this month. After hitting lows in late March, equity markets have staged a strong rally. The S&P 500 hit a new all-time high this week, closing above 7,000 for the first time. The index is up approximately 8 percent this month and is 3 percent higher year-to-date.
The tech-heavy Nasdaq has performed even better, also reaching a new all-time high and closing above 24,000 for the first time. The index is up more than 11 percent this month and is now 3.7 percent higher this year. Tech has regained its momentum, with Magnificent 7 stocks Amazon and Alphabet, the parent company of Google, rising 17.9 and 16.1 percent, respectively, in April.
Price of Oil Falls
The cost of a barrel of West Texas Intermediate (WTI) crude has fallen from its early April peak of $115 per barrel to $87 per barrel. It remains 52 percent higher for the year and the situation continues to evolve. President Trump stated Thursday there may be peace talks with Iran this weekend and Israel and Lebanon agreed to a ceasefire, which began at 5 p.m. on Thursday.
The price of natural gas in the U.S. is down approximately 14 percent this year. Natural gas prices are highly volatile and can be significantly affected by weather. Despite ongoing turmoil in energy markets, the decline highlights the strength of the U.S. natural gas industry. Natural gas prices in Europe have also declined significantly from March highs but remain approximately 30 percent higher than pre-war levels.
Another Good Start to Earnings Season
A key reason equity markets remain resilient is that corporate earnings and future earnings outlooks remain strong. This week marked the unofficial start of the first-quarter earnings season. Fourth-quarter earnings season was considered the best in several years, and so far, this quarter is following suit.
According to Nick Raich at Earnings Scout, as of Wednesday evening, 43 S&P 500 companies have reported earnings, with profits up 22 percent over the same quarter last year. Eighty-six percent of the companies beat sales estimates by an average of 12 percent. More importantly, according to Earnings Scout, outlooks from early reporters are better today than they were three, six and nine months ago.
We do not want to be overly optimistic. There are still a number of pitfalls markets must navigate. Nevertheless, as we have noted before, there are also meaningful tailwinds supporting markets.
Have a great weekend and as always, if you have any questions or concerns regarding markets or your financial planning needs, please reach out to us at (518) 415‑4401.
About the Author: With almost three decades of financial industry experience, Rick serves as a Senior Investment Officer at Arrow Bank. He oversees individual and corporate retirement plans, personal trusts, investment management accounts, foundations and not‑for‑profit relationships.