Farewell April. you weren't as cruel to the stock market as you could have been.
In fact, the S&P 500 had its best month since December, 2003. The Dow rose 4.5 percent for the month, its first monthly gain in six months and its best performance since last May. The Dow crossed above 13,000 Thursday for the first time since January. The Nasdaq rose 5.9 percent, its best gain since July, 2005, and the S&P was up 4.8 percent.
Now on to May. We're throwing out the tired saying, "sell in May and go away" this year. This has not been your predictable, ordinary year in the markets.
The Fed's actions Wednesday left Wall Street a bit perplexed going into Thursday, but by the end of the day it seems a few things are clear. The Fed did not deliver a heart stopping declaration that it was ready to pause, yet it certainly appears that's what it will do. It removed some of the tough language on risk to growth from its statement and remains worried about inflation.
The Fed also cut the Fed funds rate by a quarter point, as expected. But what confused markets, and sparked an immediate run up, then run down in stocks, was the Fed's commitment to fighting inflation. Its language wasn't tough enough for some in the markets who want to see strong words from the Fed that it will battle inflation (and stop the shrinking of the dollar).
"I think it suggests the Fed is not the story," for stocks any longer, said BlackRock's Bob Doll on "Street Signs" right after the Fed news. "It will be what happens to the economy. What happens to earnings going forward," he said.
The Dow finished off 11.81 Wednesday at 12,820, giving up a 178 point gain. The Nasdaq was off 13, and the S&P was off 5.
I asked veteran trader Art Cashin why all the wild action in stocks after the news. Cashin, UBS director of floor operations, said after an initial ramp up, stocks reversed, as investors started to reconsider the statement.
"They saw the big guys are not convinced they are on hold now. This is one of those good news, bad news routines," Cashin said.
But Citigroup economist Steve Wieting had a different view from those stock traders. He noted the Fed dropped from its statement that reference to downside risk to growth remains.
"They did take the statement out and there's fairly universal expectations that the Fed has earned a pause," he said. He also said the markets are not signaling a long period of accelerating inflation. He said aside from food and energy and the commodities markets, there is no sign that inflation is an issue.
"Really, the particular decision today is not pivotal," said Wieting. What really matters, he said is how well policy ends up impacting broader financial conditions. He noted credit markets are improving and in the past six weeks, spreads have come in.
But the markets are not yet healed. "Even as we speak, credit markets, especially in securitization, are nowhere near business as usual. I think it was always going to take some time to sort out these issues, and private credit markets will show us the way," he said.