Market decline

Your Money with Mark: April market decline recap

Apprehension about future prospects is reflected in the decline in the US stock market.

MOLINE, Ill. — Financial Advisor Mark Grywacheski with Quad Cities Investment Group recapped April’s sharp stock market selloff and offered her thoughts on whether the US economy appears headed for another recession on Monday, May 2 with News 8’s Angie Sharp on Good Morning Quad Cities.

Find our full conversation below.

Grywacheski: So far this year, the stock market hasn’t been kind to investors. The massive sell-off in stock prices continued on Friday. The S&P 500 lost 155 points, the Nasdaq lost 536 points while the DJIA fell 939 points. The S&P 500 and Nasdaq closed Friday at their lowest price of 2022.

Sharp: April was a particularly painful month for investors. Why did we see such a strong sell-off in the stock market last month?

April was a very difficult time for investors. For the NASDAQ, its monthly decline of 13.3% was its worst April performance since 2008. For the S&P 500 (-8.8%) and DJIA (-4.9%), it was their worst April performance since 1970.

More and more companies are starting to warn about their ability to generate profits/income on 09/06/12 down the road. It’s that worry about inflation, rising interest rates and the strength of the economy (“Will we see another recession?”). All this apprehension about future prospects is reflected in this stock market decline.

Turning to the economy, on Thursday, April 28, the Commerce Department announced that the US economy actually contracted at an annualized rate of 1.4% in the first quarter. What do you think of this latest report?

In the first quarter, Wall Street expected the economy to grow at an annualized rate of 1.1%. Instead, it actually contracted by 1.4%.

After the initial impact of the pandemic in the first and second quarters of 2020, we saw this economic surge in the third and fourth quarters and throughout 2021 as the economy/businesses reopened and millions of people have returned to work.

But as I said in the second half of last year, as we approach 2022, many of those tailwinds for recovery will have died down and economic growth will be much harder to come by. For Wall Street, the concern was to see a slow, gradual decline toward a more normal pace of economic growth or a very sharp drop in growth. And on Thursday, unfortunately, we got our answer.

What do you think of the growing concerns that the economy is headed for another recession?

A recession is defined as two consecutive quarters of negative growth. We just had our first quarter of negative growth and all we need is the 2nd quarter to show negative growth and we are technically in a recession. We anticipate a return to a positive growth rate in the 2nd quarter.

But I think the biggest recession concern is later this year and into 2023. To get that inflation under control, the Federal Reserve is planning seven 0.25% rate hikes this year and three more in 2023. To have 10.25% interest rate hikes in such a compressed period of time is that they put tremendous pressure on consumers, businesses and ultimately the economy.

Watch “Your Money With Mark” segments Mondays at 5 a.m. Hello Quad Cities.