A Rough Month For Equities
May 18, 2022
April was a rough month for equities. The S&P Total Return Index was down -8.72%, the Russell 2000 Total return Index was down -9.91%, and the Nasdaq Composite was down 13.24%. This puts the S&P Total Return down 12.92% for the year, the Russell 2000 Total Return down 16.69%, and the Nasdaq Composite down 21%.
It was the worst April in the last 21 years (2002-2022) (fig. 1), and the 7th worst month out of 244 month (Jan 2002-April 2022) (fig 2). This was a somewhat unusual outcome because over the previous 20 years April tends to be a relatively positive month. Looking at the previous 20 years of returns, April has only experienced negative returns in 4 of these years (2002, 2004, 2005, and 2012), and had an average return of just a bit over 2.5%.
| Fig. 1 | Fig. 2 |
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Grid Source: Stadion; Data Source: Bloomberg Terminal
We believe there are many factors involved, including the war between Russia and Ukraine causing global turmoil as well as the Federal Reserve being in a tough spot between trying to support a stable economy with orderly markets and trying to combat high inflation which they once considered “transitory” but which has become “persistent”.1 These factors may not bode well for strong equity returns or a bright outlook for the near future. We will continue to monitor these factors and the markets closely as we move forward.
Rob Dailey
Portfolio Management Analyst
1https://www.economist.com/leaders/2022/04/23/why-the-federal-reserve-has-made-a-historic-mistake-on-inflation Published April 23, 2022; Accessed May 16, 2022.
The S&P 500 Total Return Index is an unmanaged index of 500 common stocks chosen for market size, liquidity and industry group representation. It is a market-value weighted index. As a total return index it assumes reinvestment of all cash distributions.
The NASDAQ Composite is a stock market index of the common stocks and similar securities listed on the NASDAQ stock market and it is highly followed in the U.S. as an indicator of the performance of stocks of technology companies and growth companies.
The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index.
There are certain limitations to technical analysis research, such as the calculation results being impacted by changes in security price during periods of market volatility. Technical measurements are one of many indicators that may be used to analyze market data for investing purposes and should not be considered a guaranteed prediction of market activity.
The Reports’ commentary, analysis, opinions, advice, and recommendations represent those of Stadion Money Management and are subject to change at any time without notice. The opinions referenced are as of the date of publication and are subject to change to due changes in the market or economic conditions and may not necessarily come to pass Stadion reserves the right to modify its current investment strategies based on changing market dynamics or client needs. This document may contain certain information that constitutes “forward-looking statements” which can be identified by the use of forward-looking terminology such as “may,” “expect,” “will,” “hope,” “forecast,” “intend,” “target,” “believe,” and/or comparable terminology. No assurance, representation, or warranty is made by any person that any of Stadion’s assumptions, expectations, objectives, and/or goals will be achieved. There is no guarantee of the future performance of any Stadion portfolio. This material is for information use only and should not be considered financial advice. The data presented has been gathered from sources believed to be reliable; however, their accuracy, completeness, or reliability cannot be guaranteed. We make no warranties and bear no liability for your use of this information.
Diversification does not eliminate the risk of experiencing investment losses.
Stadion Money Management, LLC ("Stadion") is a registered investment adviser under the Investment Advisers Act of 1940. Registration does not imply a certain level of skill or training. More information about Stadion, including fees, can be found in Stadion's ADV Part 2, which is available free of charge.
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Past Performance is no guarantee of future results. Investments are subject to risk, and any of Stadion's investment strategies may lose money.
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