The end of April coincided with the completion of President Trump’s first 100 days in office. Many of the President’s campaign promises, such as the replacement of Obamacare, have yet to transpire, and the tax proposal unveiled last week appeared to lack substance. Nonetheless, the markets have held steady and maintained the gains that began last November.

The market closed the month of April with modest gains. The Nasdaq rose 2.3%, the Dow finished up 1.3%, the Russell 2000 gained 1.05%, and the S&P 500 squeaked out a .91% increase.  Investors largely ignored weak economic data and instead focused on corporate earnings. With nearly 300 companies in the S&P 500 having reported, first-quarter earnings are on track to rise 12% last year. That’s above the first-quarter earnings growth of 9.1% that analysts estimated as of March 31.

The last week of the month began with a relief rally, as the Dow jumped 216 points on Monday following the positive results from the first round of the French presidential election. The results were positive because only one anti-EU candidate made it through to the second round of the elections. A victory for Le Pen may trigger a domino-like exodus from the European Union, a scenario set in motion last year with Brexit.

But last week ended on a bit of a down note: The US economy grew just 0.7% during the first quarter, below the consensus of 1%. This is a blow to the Trump administration, which vowed to boost the growth rate to 3% or more during its reign. It may also be a warning shot to the Republicans, who need to resolve their differences and actually get something done, whether it is health care reform or tax changes.

It is important to note that the sluggish GDP may have been the result of seasonal factors, and traditionally the first quarter has been weak, as the economy picks up steam in the Spring and Summer. Most economists expect growth to be between 3-4% this quarter, and then settle back in to the 2% range that has been the norm since 2000.

In terms of sectors, every sector except Energy posted monthly gains. The top-performers for the month were Consumer Discretionary (4.50%), Industrials (3.65%), and Materials (3.38%). The worst-performing sectors were Energy (-0.66%), Utilities (0.50%), and Consumer Staples (1.01%). For the year, Technology leads the pack, with over a 12% gain, and Energy is the laggard, down 10%.

The yield on the 10-year Treasury fell 11.4 basis points in April to 2.28, the largest one month yield decline in seven months. We still maintain that a pullback in equities will result in a flight to quality and safe haven assets. We don’t expect a huge move in yields – somewhere between 50 basis points to a maximum of 3% by the end of August.

Oil ended the month below $50, marking its second straight monthly loss. There is now concern that OPEC may not extend their production cuts during the second half of the year. In addition, large US inventories coupled with strong production will also pressure oil prices. We expect oil to remain in a $50 – $55 per barrel price range.

Economic indicators showed mixed results in March. US wages and benefits rose at the fastest pace since 2007 during the first quarter, signaling a tightening labor market. The University of Michigan’s consumer sentiment indicator edged down from 98 in March to 97 in April. And the Chicago Purchasing Managers Index eked out a small gain to 58.3 in April from 57.7 in March (any reading above 50 indicates improving conditions). The unemployment rate continued to remain below 5%, an important factor in the Fed’s interest rate decisions.

The latest monthly inflation rate as measured by the Consumer Price Index (CPI-U) decreased 0.3% for the month of March, as reported by the Bureau of Labor Statistics (BLS). This decline was the first monthly decrease in the index since February 2016. The CPI-U rose 2.4% before seasonal adjustment for the 12-month period ending in March, its biggest jump since Spring of 2011.

There is likely to be continued political gridlock in Washington in the months to come, as evidenced by the postponement of the budget talks in order to avoid a shutdown. Further inaction and a possible government shutdown may cause market ripples and volatility. Furthermore, global political and economic events such as the French elections and North Korea’s saber-rattling warrant a cautious outlook. But the markets and economy appear fundamentally sound for the long-term horizon investor.