While grim economic data shows the global economy heading toward a recession you wouldn’t know it by looking at the current stock market. The S&P 500 ended April up 12.7%—its largest one-month percentage gain since January 1987. The Dow Jones Industrial Average ended with an 11.1% gain in April, and the Nasdaq Composite closed the month up 15.4%. While uncertainty continues and many corporations are not providing Q2 earnings guidance, investors remain hopeful as the economy gradually reopens.
US GDP numbers were released revealing a contraction of 4.8% in Q1, higher than the expected 3.5%. This was the first drop in GDP since 2014 and the largest since the financial crisis. Last week, 3.8 million Americans lost their jobs, according to the Department of Labor's report on Thursday, totaling over 30 million unemployed workers since mid-March.[1]
The Federal reserve said Wednesday that rates will remain low until Congress is confident that we have made it through this crisis. This public health crisis will continue to weigh on the economy and poses “considerable risks”. This decision keeps rates in a range of 0% to .25%. The Fed also committed to purchasing Treasury securities and mortgage backed securities “in amounts needed to support a smooth functioning economy.”
Oil prices jumped Thursday to end one of the most volatile months in history. Fuel demand slumped around 30% in April even after major oil producers agreed to cut production, but prices still recovered as crude inventory in the US grew less rapidly than expected.
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