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Market Update: May 2, 2012

John Gorlow | May 02, 2012

Month In Review

In April, the S&P 500 stock index posted its first monthly decline since November. Stocks slipped on rising fear that the U.S. economic recovery might be faltering. The deep recession in Spain, combined with trouble in its banking sector and reports of a double dip recession in Britain highlighted risks in the developed markets and raised more questions about whether government belt tightening in Europe had gone too far. 

The S&P 500 stock index finished April down 0.8 percent after late month gains fueled by upbeat earnings reports from blue chips including Apple, Amazon, American Express, Citi Bank, Coca Cola, GE, Halliburton, IBM, and Microsoft among others. Hopeful news about home sales, falling consumer debt levels, and solid retail sales helped the index recover from its biggest weekly slump of the year: a slump that was exacerbated by reports that the U.S. economy created fewer jobs in March than the economy had expected.  

In foreign stock markets, the MSCI Developed EAFE Index fell 1.96% and the MSCI Emerging Markets Index declined 1.2%. Global real estate securities gained 2.5%, gold and commodities each dropped 0.5%. The Barclays Aggregate Bond Index gained about 1%. The Merrill Lynch Treasury Inflation Index rose over 2%.

In headline news, the Federal Reserve chairman, Ben Bernanke expressed doubt on adding to the economic stimulus. He noted that the costs would be high and benefits uncertain. $430 Billion were added to the I.M.F. war chest; however the European Central Bank is not expected to try and ease the Euro zone crisis. China’s trade imbalance with the rest of the world is diminishing.

DFA global equity index returns fell 1.35%, the aggressive 80/20 index declined 1.03%, the normal 60/40 index lost 0.71%, the moderate 40/60 index dropped 0.39%, the conservative 20/80 index lost 0.08% and the fixed income strategy gained 0.24%.

Year-to-date DFA global equity index returns are +11.63%. Aggressive 80/20 index returns are +9.44%. Normal 60/40 index returns are +7.28%. Moderate 40/60 index returns are +5.13%. Conservative 20/80 index returns are +3.00%. Fixed income index returns are +0.89%.


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