Major stock market indices were up again in April as investors balanced strong U.S. economic data against the risks from challenging Covid-19 outcomes in other areas of the world.  The equity gains were broad based as large cap (S&P 500 +5.3% and Nasdaq +5.4%) continued to make up ground against small caps (Russell 2000 +2.1%) for the second straight month.  Sector level performance remained more uniform in April as every sector had positive returns. Foreign equity markets lagged a bit as the MSCI EAFE index was +3.1% while the MSCI Emerging Markets was +2.5%. Oil prices resumed their upward trend as the benchmark WTI spot futures contract was +6.7% in April and is now +28.9% YTD.

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After a historically poor 1Q, bond markets recovered in April as the Bloomberg Barclays U.S. Aggregate index was +0.79% for the month and is now -2.61% YTD. U.S. Treasury yields decreased as much as -14 basis points and the curve bull flattened. Investment grade corporate credit spreads narrowed -3 bps and outperformed duration matched Treasuries by +13 bps. High Yield continued to outperform (+1.09% total return in April) aided by the risk on tone in financial markets.

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U.S. economic data released in April came in well above expectations and accelerated nicely from the depressed levels of February. Job gains of +916,000 were reported to have occurred in March. The unemployment rate ticked down from 6.2% to 6.0% but the U.S. remains nearly 9 million jobs short of pre-pandemic levels. The April report of Retail Sales showed a significant monthly increase of +9.8% occurred in March. Strength was broad based as even restaurants saw a +13.4% increase as vaccination rates have help loosen restrictions and has given consumers more confidence. The initial estimate for 1Q growth came in at a +6.4% annualized seasonally adjusted growth rate. Consumer spending (+10.7%) was the major means of growth and sales of consumer goods grew at a rate of +23.6% while consumer services “only” grew at a rate of +4.6%.  This portends well for continued strength as the economy re-opens and will likely set off a surge in consumer spending on services.