Blog Article

May 2024 Market Update

Kristi de Grys

By Kristi de Grys, Chief Operating, Investment, and Compliance Officer
Published On 05/08/2024

After a strong first quarter, global markets swooned in the month of April. The proximate cause was indication that inflation in the U.S. was not falling as fast as investors thought it would. With the year-over-year rise in the consumer price index (CPI) sticking in the 3.5% range, it seemed clear the Federal Reserve would continue to hold rates steady for longer and investors reacted, leading to a market pullback. Small company stocks have been more sensitive to changes in investors’ expectations of future interest rates and were hit harder by the shifting view. On the other hand, at the end of last year they benefited greatly when sentiment became more positive. It is difficult, if not impossible, to predict where interest rates will go, so it seems likely that markets will continue to shift as sentiment changes.

 

The gray bars in the chart below from Dimensional show that intra-year declines in the U.S. market, represented by the Russell 3000 Index, are very common. Even when the calendar-year return (represented by the teal dots) ends in double-digit positives, the market can suffer inter-year declines also in the double digits. Looking historically puts the ~6% decline from peak to trough the index experienced in April into perspective. While interest rate speculation is likely to continue to drive volatility, it is a good reminder that month-to-month gains and pullbacks are a fact of life in investing and tell us nothing about where the market will end the year.

 

 

 

 

Disclosure: All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.  Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be taken as such.

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Kristi de Grys

By Kristi de Grys, Chief Operating, Investment, and Compliance Officer

As Chief Operating, Investment, and Compliance Officer, Kristi is responsible for the firm’s investment offerings, client service, operations, and compliance. She and her team are focused on delivering ever greater value to our clients through outstanding service, diversified investment offerings, and easy-to-use technology.

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