April 2023 Market Review

Fidelity Bank – Wealth Management
April 2023
William J. Fennie III, CFA

Volatility continued to fall significantly from its peaks in March as pressure on US regional banks subsided in April. The CBOE Volatility Index (VIX), often referred to as the ‘fear gauge” spiked up to 26.52 in mid-March during the collapse of Silicon Valley and Signature Bank and has fallen to 15.78 at the end of April. That is the lowest reading since November of 2021. Even with the rise and fall of volatility, the S&P 500 posted a positive gain in March (+3.67%) and posted another positive gain of 1.56% in April. Bond markets have continued to bear their own share of volatility. The ICE BofA MOVE Index measures volatility by the difference in current rates versus market expectations 1 month out. The Fed’s rate increase campaign, inflation, and conflicting recessionary/expansionary data points have driven bond market volatility to levels not seen since the Global Financial Crisis. Despite this volatility, the Bloomberg Aggregate Bond Index notched its second month in a row of positive gains increasing 0.61% in April. This is the first consecutive month of positive returns for the Index since June and July of 2021.

Economy

One of the objectives of the Federal Reserve’s interest rate campaign has been to reign in the robust employment market. The lags of monetary policy are beginning to show in some of the data points. The Bureau of Labor released data indicating job opening have continued to fall to 9.6MM from nearly 11.6MM in the beginning of 2022. Additionally, layoffs rose to their highest level since December of 2020 with more than 1.8MM in March. Conversely, the April jobs report released on May 5th indicated employers added 253,000 jobs in April beating median estimates of 185,000. However, March’s jobs number was downwardly revised to 165,000 from 236,000.

Equity 

Value stocks outperformed their growth counterparts in April as the Russell 1000 Value outpaced the Russell 1000 Growth by 0.52% (1.51% vs. 0.99%). Year to date, Growth stocks have rebounded by 15.49% after a dismal 2022.

International Developed Value stocks were the best performing equity asset class in April, with the MSCI EAFE Value Index jumping 3.22%. The asset classes have enjoyed a solid 6 month run returning 22.90% over that span. Weakness in the US dollar since its peak in September of 2022 has helped bolster international markets. In April, the weakening US Dollar helped add about 0.54% to international returns.

Fixed Income 

Despite the volatility in rates, fixed income markets posted another increase in April with positive returns in all but the Bloomberg Municipal Bond Index, which declined by a mere .23% but is still up 2.54% year-to-date.  The Bloomberg High Yield Corporate Bond Index increased by 1%, as spreads were relatively steady during the month.  A weakening US dollar helped Emerging Market Local Debt add another 0.86% in April. Year-to-date EM Local debt has been the best performing Fixed Income asset class jumping 6.06%.

Real Assets 

Trepidations of future growth and recession fears have led to several months of minimal to negative returns in broad commodity markets. The energy complex has been the largest laggard. Over the past 6 months, the Bloomberg Sub Energy Index is down 29.52% in a welcome reprieve to consumers and inflation readings.  The Bloomberg Natural Gas Index continued its year-to-date slump dropping an additional 2.26% in the month of April and is down 51.53% year-to-date. Notable gains were made in Softs which rose 12.54% in April and are up 22.97% year-to-date. Spot Gold prices added another 0.65% gain for the month of April bringing the year to date returns to 9.47%.

April 2023 Market Review is intended solely to report on various investment views held by Fidelity Deposit & Discount Bank and is distributed for informational and educational purposes only and is not intended to constitute legal, tax, accounting, or investment advice. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. Fidelity Deposit & Discount Bank does not have any obligation to provide revised opinions in the event of changed circumstances. All data is provided by Bloomberg Finance, LP and Morningstar Direct. We believe the information provided here is reliable but should not be assumed to be accurate or complete. Data, if not otherwise noted, is as of 4/30/2023. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer or recommendation to purchase or sell a security. Past performance is no guarantee of future results. All investment strategies and investments involve risk of loss and nothing within this report should be construed as a guarantee of any specific outcome or profit. Investors should make their own investment decisions based on their specific investment objectives and financial circumstances and are encouraged to seek professional advice before making any decisions. Index performance does not reflect the deduction of any fees and expenses, and if deducted, performance would be reduced. Indexes are unmanaged and investors are not able to invest directly into any index. The S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large‐cap segment of the U.S. equities market.

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