• The S&P 500® was up 0.27% in April, bringing the YTD return to -0.96%.
• The Dow Jones Industrial Average® was up 0.25% for the month and was down 2.25% YTD.
• The S&P MidCap 400® was down 0.34% for the month and down 1.48% YTD.
• The S&P SmallCap 600® was up 0.96% in April and up 1.20% YTD.
April came in like a hawk and went out like a dove, although the FOMC’s May 1-2, 2018 meeting could add a footnote to that, as verbiage, but no action, is expected. Specifically for the month, the threats of a trade war and a nuclear armageddon appear to have faded (but not departed), with trade talks moving behind closed doors, where the spread for winners and losers is much less and the ability to live with the results much better. The potential broader conflict walked into a hand-holding momentary border crossing between the two Korean leaders, producing the strange sight of an in-command dictator and a former human rights lawyer—don’t tell me politics doesn’t make for strange bedfellows. Closer to Broad and Wall, you expected and you received, as earnings season lived up to its “great expectations,” meaning no major push from earnings, but some price support. Based on the 65% of market value reported to date, 78% of the issues beat their estimates—which were already high. Lower income tax rates appear to be the main driver, with the result being an easy record for earnings. However, the true winner was sales, which came in with an usually high beat rate of 72.5%, posting a 9.0% year-over-year increase, with the estimate only 3.1% shy of a new record. The earnings increases, however, overpowered the sales gains, as operating margins rose to 11.75%, easily setting a new record and significantly higher than the 20-year average rate of 8.08%. Buybacks played a role in the first quarter, as the initial reports (29% reported; the 10Q reports are still needed for most)