Stocks imploded in April, what’s in store for May?

Bob Doll, Laura Martin and Mark Newton share insights into the stock market in Making Money.

Stock investors who have been around for a long time were agitated in April amid precipitous swings and losses not seen in decades.

The S&P 500 and Dow Jones Industrial Average posted their worst April since 1970, down 8.8% and 4.9%, respectively. The Nasdaq Composite’s 13.2% decline was the sharpest since April 2000, as recorded by the Dow Jones Market Data Group.

Abyssal April for stocks

Source: Dow Jones Market Data Group

“It was a disaster,” James Bianco, president of Bianco Research LLC, told FOX Business. “Markets are starting to see that the Fed is going to be very aggressive,” he added. Bianco forecasts that policymakers will hike rates by 50 basis points at every meeting this year, including this week’s Wednesday, with the possibility of an even larger hike at one of two such meetings later this year.

S&P500

WARREN BUFFET’S INFLATION WARNING

Investors could expect more downside volatility in May provided inflation does not ease. “What’s ending this cycle is inflation, moderate inflation, and that’s causing the Fed to retreat,” Bianco added.

CONCERNED ABOUT INFLATION? WELLS FARGO SAYS NOTE THIS DATA POINT

The consumer price index, which tracks multiple items including groceries, petrol, rent and health care, rose 8.5% in March from the same period last year, the fastest pace since December 1981, when inflation hit 8.9%. The producer price index is even higher, up 11.2%. The diesel fuel component rose 20.4%, accounting for most of the increase. New updates are due in mid-May.

ELON MUSK PERMANENT INFLATION WARNING

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Last week, the US economy contracted a surprise 1.4% in the first quarter, raising renewed concerns about a recession.

In a recent research note titled “Recalibrating our views,” Bank of America Equity & Quant Strategist Savita Subramanian outlined what’s changed so far this year. “War, GDP cuts, Fed on steroids…” she elaborated. As a result, it lowered its year-end target for the S&P 500 to 4,500, still up 8.9% annually from Friday’s close.

Nasdaq Composite

With major stock averages down sharply this year, notably the Nasdaq, LPL Financial’s chief markets strategist Ryan Detrick takes a different view.

Stocks in 2022

Source: Dow Jones Market Data Group

“Everyone is bearish right now, we get it, two years ago everyone was bearish too and look what happened. We’re not saying we’re likely to have that type of rally, but there’s a lot of negativity and the economy is still strong, earnings and earnings are still pretty solid here and we’ll take advantage of this opportunity,” he told FOX Business.