May 5, 2004 — April was a cruel month for domestic equity funds, but the market is likely to show solid gains for 2004 overall, says Sam Stovall, chief investment strategist for Standard & Poor’s.
Higher interest rate prospects and presidential election politics were largely responsible for domestic equity funds’ losses in April, noted Stovall. All fund style categories were in the red for the month, as well as the S&P 500.
A negative reaction on the part of investors to monetary and political trends is reflected in domestic equity funds’ modest 0.84% gain this year through April, and in the category’s sharp 2.85% decline in April.
While the market typically gains in presidential election years, so far in 2004 results are weak since election year gains are generally concentrated in the second and third quarters, Stovall notes.
More defensive value-oriented mid- and large-cap fund categories held up better in April. So far this year, value offerings have generally outperformed, with the small-cap value category continuing to lead the way.