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The month that was:
April ended the market's winning streak. The S&P 500 went down by about 4%, the Nasdaq went down by about 4.4%, and the Dow went down by about 5%. This was the first losing month for the S&P 500 since October of last year.
The main reason was inflation. On April 10th, the CPI report showed that prices went up 3.5% compared to last year, which was higher than expected and the third hot report in a row. The market went down right away, and the 10-year Treasury yield went back above 4.5%. On top of that, Iran and Israel attacked each other in the middle of the month, which made investors more nervous.
Why can one report move the market so much? In my January newsletter, I explained that investors are trying to guess when the Fed will cut interest rates. The Fed has said it will only cut rates once it is confident that inflation is coming down toward its goal of 2%. When inflation comes in hotter than expected, investors realize the Fed will probably wait longer to cut. At the start of the year, many people expected six rate cuts in 2024. By the end of April, many people expected only one or two. Every time that guess changes, the stock market reacts.
This is a good reminder that the market does not move only on what is happening today. It moves on what investors think will happen in the future. When those expectations change suddenly, prices change suddenly too.
Buys -
Bought 14 DT at $46.21
Dynatrace makes software that helps companies watch over their apps and websites and find problems before customers notice them. As more companies move to the cloud, they need tools like Dynatrace. The company is profitable and growing, and the stock had pulled back, so I started a new position.
Bought 2 MSCI at $446.10
MSCI creates many of the stock indexes that big investment funds follow, and it sells data and research to investors. On April 23rd, MSCI reported that more customers than usual had canceled their subscriptions, and the stock went down about 13% in one day. MSCI is a very high quality company with high profit margins and a growing dividend, so I used the drop to start a new position.
Bought 25 INTC at $35.09
Intel is trying to make a comeback by building new factories to make chips for other companies. I bought shares on April 25th, the day Intel reported earnings. That evening, Intel gave a weak forecast for the next quarter, and the stock went down about 9% the next day.
Bought 3 HSY at $185.55
I added a few more shares of Hershey at a lower price.
Sells -
Sold 15 PYPL at $66.71
I sold my PayPal shares for a small profit of about 3%. After thinking about it more, I was not confident that PayPal could win against all of its new competition.
Sold 40 PFE at $25.30
Pfizer kept going down after I bought it last month, and I sold my shares for a loss of about 7%. I decided I would rather own companies whose businesses are growing again than wait for Pfizer to turn around.
Thanks for reading my newsletter!