Financial Market Roundup
Produced by Fifth Third's Investment Management Group

In the following piece, Fifth Third's Investment Management Group recaps the market and how it reacted to various events in the month of April.


The Federal Open Market Committee (FOMC) last met on March 22nd when they increased rates by 25 basis points, leaving the Fed Funds target to a range of 4.75%-5.00%. Fed Chair Jerome Powell noted that the “…committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2.0% over time.” As of the end of April, markets are expecting one additional 25 basis point increase for 2023 coming when the FOMC meets in early May.

The European Central Bank (ECB) last met in March and increased rates by 50 basis points. In their subsequent press release it was noted the increase was done “… to ensure the timely return of inflation to the 2.0% medium-term target.” As of the end of April, Markets are also expecting another 25 basis point increase when the ECB meets again, with additional hikes in the second half of 2023.


Global equities were mainly higher in April. Domestically, smaller market cap indexes fell as did the more cyclical sectors of the S&P 500, although the S&P 500 index was higher for the month.

2023 Q1 Earnings season is well underway, with just over half of the S&P 500 reporting their results as of the end of April. In aggregate, the S&P 500 results have been stronger than expectations with around 80% of companies who have reported noting Q1 earnings through their target estimates, a ratio well above the prior quarter.

The S&P 500 Index rose by 1.6% in April. The blue-chip Dow Jones Industrial Average rose by 2.6%. The tech heavy NASDAQ Composite rose by 0.1%. International stocks were mixed with the MSCI All Country World Index of developing and developed market stocks up by 1.5% in April. The MSCI Emerging Market Index fell by 1.1% in April. The MSCI EAFE Index of developed international equities was up by 2.8% in April.


On April 27th, the GDP report for Q1 of 2023 came out detailing quarter-over-quarter economic expansion of 1.1%, below market estimates of 1.9%. The miss was largely due to contraction in private inventories and residential fixed investment, although was offset by consumer spending and positive net exports.

In March, the Fed released its Summary of Economic Projections which details the central banks outlook on a variety of prospective economic measures. Specifically, investors digested worsening projections for expected inflation, and a slight drop in expected GDP despite positive Q3 & Q4 2022 GDP figures of 2.6% and 3.5%.

Following a month with historic volatility in U.S. Treasury rates, April saw a return to more normal levels of volatility across the U.S. Treasury curve. During the month most term points on the U.S. Treasury curve moved slightly lower. At April month-end, the U.S. Treasury 2-year yield fell to 4.01% with the 10-year falling to 3.42%. The results of these changes netted a slightly more inverted curve with the 2/10 inversion expanding to 58 basis points.

Mortgage Rates moved higher in April as the Freddie Mac 30-year Primary Mortgage Market Survey rose to 6.43% on April 27th up 11 basis points from March 30th.