What a difference a month makes. After declining 5% in March, the S&P 500 staged quite a rally in April. The blue-chip U.S. index surged 11% to close the month at a new all-time high. Technology stocks were back in fashion with the sector climbing 20% over the month. Performance overseas was also strong but lagged the U.S. as the MSCI ACWI Ex USA Index rose 8% in April. Fixed income delivered more subdued returns for the month as rising inflation expectations lifted interest rates and lowered bond prices.
The last two months perfectly highlight why investors should not try to time the market. As tensions with Iran ratcheted up in March, the S&P 500 swiftly fell 8% as investors worried about a prolonged conflict and higher oil prices. A ceasefire in late-March paired with talk of a potential meeting between the U.S. and Iranians sparked a quick reversal with the index reclaiming its pre-war level just two weeks after the late-March bottom.
Despite the rally, issues remain. The Strait of Hormuz is effectively shut, and oil prices have nearly doubled since the start of the year. Higher oil prices should raise inflation and dent consumer sentiment, potentially weighing on consumer spending. However, the market is largely looking through this one-time price shock and focusing on the positives. Consumer spending, while slowing, remains solid, the artificial intelligence capex cycle appears to still be in the early innings, and earnings growth forecasts for this year and next continue to be revised higher. We expect more choppiness in 2026, which is typical in mid-term election years, but the bull market backdrop that powered the last three years of returns appears to still be intact.
The takeaway for investors from the last two months is “time in the market” is what matters. Trying to jump in and out of the market is extremely difficult and often impairs long-term returns. Instead, we construct risk-appropriate portfolios that can capture the upside in markets and protect during downturns. As always, if you have any questions or concerns regarding your portfolio, please reach out to a member of the Aurdan Capital team.
IMPORTANT DISCLOSURES
The views, opinions and content presented are for informational purposes only. The charts and/or graphs contained herein are for educational purposes only and should not be used to predict security prices or market levels. The information presented in this piece is the opinion of Aurdan Capital Management and does not reflect the view of any other person or entity. The information provided is believed to be from reliable sources, but we cannot guarantee the accuracy or completeness of the information, no liability is accepted for any inaccuracies, and no assurances can be made with respect to the results obtained for their use. The information contained herein may be subject to change at any time without notice. Past performance is not indicative of future results.