Domestic and foreign equity indices rose in April as rates stabilized and earnings for most companies were as expected or better. Some analysts were perplexed as the leading sectors in April were information technologies and financials, contributing over half of the S&P 500 Index 4.05% return for April. Earnings and optimism surrounding the trade discussions helped elevate shares across all sectors.
Optimistically, even though equity analysts are expecting a slow down in corporate earnings, they are not seeing a slowdown in revenue growth. This is interpreted as underlying economic growth, which may eventually fuel an increase in earnings.
The S&P 500 Index at the end of April was trading at roughly 17 times forward earnings, where it was at the peak in September 2018. A rapid rise in equity and fixed income prices since the steep drop in the fall of 2018, was unexpected by many.
Sources: S&P, Bloomberg, Reuters