Market Update

Market Review – Ripple Effect

By May 8, 2024No Comments

Ripple Effects

The impact of military conflict on markets

Key Observations

  • Markets repriced in April on “higher-for-longer” rates pushing longer duration fixed income and duration sensitive equities lower. Small-cap growth stocks were hit as the two largest securities in the index declining -15% and -37% due to moderating AI spending concerns.
  • Escalating conflicts in the Middle East have led investors to question what impact expanded conflict may have on their portfolios. Increasing oil prices has modestly priced in risk of expanded conflict into neighboring petrostates Iran and Israel.
  • While these events capture our attention, their fundamental impact on markets tends to be short-lived. With history as precedent, both the duration of a market downturn and the subsequent recovery from such events are typically measured in days rather than months or years.

Market Recap

The S&P 500 index departed from its five-month ascent, recording a -4.1% decline. Despite the advance estimate of 1.6% 1Q 2024 GDP growth reported in April, concerns arose as the pace of expansion decelerated from previous quarters, marking a departure from the six consecutive quarters of growth exceeding 2% according to BEA data.

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