Positive U.S. economic data takes domestic equities to new all-time highs in April

May 1, 2019

What happened in April?

U.S. stocks hit fresh highs in April for the first time since September 2018. The record highs were brought on in part by positive U.S. economic data, renewed trade optimism and generally positive Q1 earnings reports. Economic data released in April showed that the U.S. economy grew at an annualized rate of 3.2%, higher than economists’ forecasts. This growth rate is the strongest for a first quarter in four years and occurred despite a decrease in consumer spending. Increased exports and inventory investments buoyed this decline. The U.S. and China have also set a tentative timeline for a trade agreement that is reported to lead to a signing ceremony in either late May or early June. Q1 earnings reports continue to roll in and have been generally positive. Google’s parent company Alphabet did report a slowdown in advertising revenue towards the end of April, but the technology sector was still a leader of S&P 500 sectors, second only to financials last month.
 
Some positive news out of the Eurozone in April - GDP growth rate hitting 1.5% during the first quarter. While still below the U.S., this rate was higher than expected and significantly stronger than Q4 2018’s 0.9%. Emerging markets, as measured by the MSCI Emerging Markets Index, had another positive month, up 2.1%. However, a strong U.S. economy has resulted in a strengthening dollar that could derail this region’s equity market success this year.