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April 2022 Monthly Review

Jordi Visser

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The first trading day of 2022 was the highest ever closing price for the S&P 500 Index (SPX).  Since that day, the SPX has been under pressure, closing down every month except for March. The SPX was down four weeks in a row in April, with April being the worst month since March of 2020, during the height of Covid fears. The performance was driven by the heavily owned S&P 500 Information Technology Sector (Tech Sector). The Tech Sector had its worst month since 2008 during the Great Financial Crisis (GFC).  Equity weakness in April was driven by continued fears surrounding the Fed’s tightening cycle. Further, the bond market has not been a place of safety during the equity weakness leaving it hard for investors to find a place to hide. The Bloomberg US Aggregate Total Return Index was down for the 5th month in a row for the first time since 1994. It was the worst monthly performance for this Index since 2003 and is now down almost 10% for the year. This is more than double the negative performance in 1994, which had the prior record back to the 1970s.  Not surprisingly, the iBoxx Liquid Investment Grade Index posted its worst month since March 2020.

Despite weakness in equities and bonds, commodities continued to be strong with the 5th positive monthly return in a row. The dollar, driven by rising rates, had its largest month since 2012. The Bloomberg JP Morgan Asian Dollar Index, which is normally a proxy for growth, had its worst month since 2011. This was driven by rising China Covid fears. Under the hood of the equity market, value continued to rally while growth continued to see weakness on the back of the tech fall.  Despite these significant adjustments, the most dramatic move within the month was the fall in beta. This can be observed within the Bloomberg Pure Volatility Factor Index, which had its worst month in over 20 years. One positive contrarian sign that could signal we are nearing the end of the recent selloffs, has been sentiment. Sentiment measured through the AAII Bull to Bear Spread Index hit its highest level during April since the lows of the GFC in March 2009.


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