Welcome back to the Monthly Market Wrap from YCharts, where we review and break down the most important market trends for advisors and their clients every month. As always, feel free to download and share any visuals with clients and colleagues, or on social media.
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The 20-Year Treasury Rate topped 3% for the first time since March 2019, outpacing the 30-Year bond by 28 basis points. As yields ticked higher, investors fled from stocks in fear of persistently high inflation and a break-neck schedule of Fed rate hikes. The yield curve grew closer to normalization in April, with only the 30-20 and 10-5 Year Treasury spreads remaining inverted at month’s end.
That phenomenon is proving exceptionally true so far in 2022, but for all the wrong reasons. Each of the eight companies examined in our white paper are currently down worse than the S&P 500, but Netflix (NFLX), Amazon (AMZN), NVIDIA (NVDA), and Meta Platforms (FB) have sold off the most. Both Amazon and Meta Platforms are flirting with their largest drawdowns in the last decade, representing a combined $1.16 trillion loss in value. Netflix has retraced 72.5% from its most recent all-time high, while semiconductor designer NVIDIA is 44.4% lower.
Can the S&P 500 recover with the help of its other 497 constituents, or will the index keep falling as long as “mega cap” stocks continue to sink?
Back in March, the iShares Russell 1000 Growth ETF (IWF) was outperforming Value (IWD) on a trailing twelve-month basis, 14.9% to 11.4%. In April, the tables not only turned, but growth’s year-over-year return as of April 2022 dropped to -5.6%. Value is up just 1% over the last twelve months.
March’s unemployment rate was 3.6%, officially falling back to pre-pandemic levels. However, the labor force participation rate of 62.4% remains a full percentage point below its February 2020 print. Weekly new claims for unemployment fell further to 180,000 for the week of April 23rd, which is just 18,000 above its all-time low achieved in November 1968. Jobless claims reached a multi-decade low of 168,000 in the first week of April.
Production and Sales
US Real GDP (US GDP adjusted for inflation) declined 1.4% in Q1 2022. This marks the first quarterly decline in gross domestic product since Q2 2020. The US ISM Manufacturing PMI slowed for the second straight month, from 57.1 to 55.4 in April, but is still in the expansion territory of 50 or greater.
March’s year-over-year US Inflation rate set another 40-year high of 8.5%, while the US Core Inflation Rate did the same, now 6.5%. This marks the seventh straight monthly increase for both headline and Core inflation. The US Consumer Price Index jumped 1.2% in March, which is the first MoM increase of 1% or more since June 2008. Nevertheless, consumers are opening their pocketbooks further, according to the consumer spending (PCE) increase of 0.90% in March.
The price of Gold in USD ended April slightly lower, at $1,911.30 per ounce. Despite little price movement in gold, rising inflation, and declining purchasing power, the SPDR Gold Shares ETF (GLD) still fell 2.1% in April. The VanEck Gold Miners ETF (GDX) also tumbled 8.8%.
As with equities, the prices of major cryptocurrencies fell sharply in April. One Bitcoin was worth $38,651 as of April 30th, representing a monthly decline of 17.9%. Ethereum ended April 16.7% lower, at $2,817. Cardano had the worst April, tumbling 32.3% in April to 80 cents per coin. It has been six months since Ethereum and Bitcoin logged a new high—they have drawn down 39.1% and 41.2% respectively, while Cardano is 71.6% off of its all-time high.