Global Equity Markets End Week Higher, Capping a Strong April

Global Equity Markets End Week Higher, Capping a Strong April

After a mixed start to the week, indexes rallied in the second half to finish higher. Global equities, as measured by the MSCI ACWI, advanced about 0.75%, while domestic large-cap stocks, represented by the S&P 500, gained just over 0.9%. The week also marked the close of April, during which both the S&P 500 and MSCI ACWI returned more than 10%, while emerging markets, as measured by the MSCI Emerging Markets Index, and small caps, as measured by the Russell 2000, led performance, gaining just under 17% and 12%, respectively.

Earnings Expectations Surge

Earnings expectations rose sharply during the week following stronger-than-expected results from several mega-cap technology companies. As of Friday, analysts projected first-quarter S&P 500 earnings growth of 27.1%, up significantly from 15.0% at the end of the prior week, based on results from 63% of companies that had reported, along with estimates for those yet to release earnings.

Fed Holds Rates Steady

The Federal Open Market Committee held rates steady as expected, though the meeting reflected a more divided policy backdrop, with three members dissenting against retaining easing language in the statement and one favoring a rate cut, the highest level of dissent during Jerome Powell’s tenure as chair, which markets interpreted as a more hawkish signal. Powell also indicated that while the April meeting marked his final one as Fed chair, he plans to remain on the Board of Governors for an undetermined period, an uncommon move that he attributed to ongoing political pressures facing the Fed.

Growth Remains Resilient

Real GDP grew at a 2.0% annualized pace in the first quarter, rebounding from prior weakness, while underlying demand remained solid, with final sales to private domestic purchasers rising 2.5%, signaling healthy private-sector activity. Consumer spending softened modestly but remains supported by rising incomes and higher tax refunds, helping offset elevated gasoline costs, with no clear signs of broader demand deterioration. Business investment was a key driver, particularly in IT equipment and software, reflecting ongoing AI-related spending. Taken together, while higher oil prices could pose a headwind if sustained, current data show little evidence of meaningful economic deterioration.

Core PCE Inflation at 3.2% in March

Inflation pressures remained firm, as the Federal Reserve’s preferred measure, core personal consumption expenditures, rose to 3.2% year over year in March, in line with expectations and marking the highest level since November 2023, reflecting the broader impact of higher energy prices.

Looking Ahead

Looking ahead, A closely watched jobs report due Friday will provide insight into whether recent labor market strength carried into April, after the economy added a stronger-than-expected 178,000 jobs in March, rebounding from a 133,000 decline in February. Despite the improvement, hiring trends have remained uneven, with the labor market exhibiting a zig-zag pattern of alternating gains and losses over the past 10 months.

As Always

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.