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ECONOMIC UPDATE

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May 2024 | Monthly Economic Update

April2024Returns

Source: FactSet

April kicked off the second quarter of 2024 with declines in stocks and bonds. Hotter than anticipated inflation data and weaker than projected economic growth fueled concerns that interest rate cuts may be delayed and reduced. Within equities, emerging markets was one of the asset classes able to post a positive return, gaining 0.5%. Chinese equities gained a 6.6% return as strength in commodities helped the region broadly. U.S. and international developed equities fell in response to the economic data surprises, declining 4.1% and 2.5%, respectively.

Within U.S. equity sectors, real estate saw the greatest decline, falling 8.5% as interest rate-sensitive sectors took the biggest hit for the month. Utilities was the lone positive performing sector with a gain of 1.6% as defensive sectors saw some resilience. Similarly, small-cap stocks saw underperformance relative to large caps due to their greater sensitivity to changes in interest rates and the economy. While information technology was the second worst performing sector for the month, falling 5.4%, the artificial intelligence growth theme remained intact as large tech stocks posted strong earnings, helping to lift growth equities and outperform their value counterparts.

Fixed income markets fell globally as yields rose in response to potential delays and reductions in rate cuts. U.S. and international developed bonds led the decline among major regions, falling 2.5% and 2.6%, respectively. Emerging market bonds saw more favorable performance but still finished the month in the negative at -1.7%. Bonds with less interest rate sensitivity and more credit risk, such as high yield and emerging markets, outperformed, while longer maturity, higher quality, and government bonds underperformed.

With the month’s hot inflation, commodities were a top performer in April, with the broad index climbing 2.7%. Gold continued its rise on the year with a gain of 3.4% for the month, helped by ongoing geopolitical tensions and central bank policy uncertainty. US REITs struggled due to their interest rate sensitivity, seeing some of the worst returns for the month, with a decline of 7.8%.

With traditional stocks and bonds struggling in April, the global 60/40 balanced portfolio was down 3.0%. Commodities and gold would have benefited portfolios, while stocks, bonds, and real estate broadly detracted from performance.

April2024Returns1

Source: FactSet

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Unexpected financial challenges can arise, occasionally impacting your ability to save. Remember, it’s okay to temporarily pause your savings efforts. When your situation improves, make it a priority to resume setting aside funds.

Important Information
This is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed, and is subject to change. Investors seeking more information should contact their financial advisor. Financial advisors may seek more information by contacting AssetMark at 800-664-5345.

Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss. Actual client results will vary based on investment selection, timing, market conditions, and tax situation.

It is not possible to invest directly in an index. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. Index performance assumes the reinvestment of dividends.

Investments in equities, bonds, options, and other securities, whether held individually or through mutual funds and exchange traded funds, can decline significantly in response to adverse market conditions, company-specific events, changes in exchange rates, and domestic, international, economic, and political developments.

Bloomberg® and the referenced Bloomberg Index are service marks of Bloomberg Finance L.P. and its affiliates, (collectively, “Bloomberg”) and are used under license. Bloomberg does not approve or endorse this material, nor guarantees the accuracy or completeness of any information herein. Bloomberg and AssetMark, Inc. are separate and unaffiliated companies.

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