March was a historically bad month for stocks, with the Dow Jones Industrial Average posting its worst one-month decline since 2008; it lost almost 14%. April was the exact opposite, with the Dow surging 11% and the S&P 500 up nearly 13% as both indices logged their best monthly performance since 1987.
Sharp bounce backs from swift sell-offs are a known phenomenon on Wall Street, but the contrast between a rapidly improving stock market and quickly deteriorating economic fundamentals made April's gains unusual.
Traders ended the month giving a small nod to that reality, as the major indices fell and the Dow Jones Industrial Average shedding 288 points, or 1.2%, to finish at 24,345.
Consumer spending craters 7.5% in March. New data from the U.S. Department of Commerce show consumer spending fell 7.5% in March, the largest one-month decline ever in a dataset going back to 1959. This certainly gave little reason for stocks to keep up the recent rally off of their March lows, as consumer spending accounts for almost 70% of the economy.
Unemployment claims approach 30 million over six weeks. Another 3.8 million Americans filed for unemployment in the week ending April 25, bringing total claims to roughly 30 million since mid-March alone. The pace of unemployment claims is totally unprecedented in the United States, which, before 2020, set the record for the highest weekly jobless claims in 1982.
Although new claims have been trending lower in recent weeks, the 3.8 million figure was easily worse than expectations, with economists predicting 3.05 million prior to the announcement.
Even J. Crew is not immune. Well-known fashion retailer J. Crew, whose style might be described as what a stereotypical Martha's Vineyard vacationer would wear around in the summer, is reportedly filing for bankruptcy. It's very off-brand.
Taken private in a 2010 leveraged buyout, the debt on the company's books proved too much to overcome. J. Crew had planned to take its Madewell division public in a 2020 initial public offering and pay down some of its $1.7 billion in debt with the proceeds. Instead, the IPO was scrapped in March and the company has been unable to reach a satisfactory deal with lenders.