The U.S. stock market broke a streak of five consecutive months of gains in April, reigniting concerns about the impact of rising inflationary pressures and the potential for a prolonged restrictive monetary policy by the Federal Reserve.

Despite positive signals from first-quarterearnings reports, all major U.S. indices ended the month in negative territory as macroeconomic fears hit risk sentiment.

The S&P 500, as tracked by the SPDR S&P 500 ETF Trust ( SPY ) , closed 4% lower, snapping a five-month winning streak and marking its worst performance since September 2023.

The tech-heavy Nasdaq 100, monitored through the Invesco QQQ Trust witnessed a 4.4% decline for the month, similarly snapping a five-month positive streak and hitting the worst monthly return since September 2023.

Blue chip stocks in the Dow Jones, as tracked by the SPDR Dow Jones Industrial Average ETF ( DIA ) , fell 4.9% on the month, marking its lowest performance since September 2022.

Chart: April Snaps A 5-Month Winning Streak For Major US Averages

Inflation Fears Overshadow Positive Earnings Trends

With nearly half of S&P 500 companies reporting first-quarter 2024 results, 77% of companies revealed a positive EPS surprise, and 60% reported a positive revenue surprise.

However, March’s inflation reports delivered a stark reality check to investors.

The latest Consumer Price Index (CPI) report from the Bureau of Labor Statistics showed a surge in price pressures from 3.2% year-on-year in February to 3.5% in March 2024, surpassing forecasts of a 3.4% increase.

Another blow came from the Bureau of Economic Analysis’ Personal Consumption Expenditure (PCE) price index report, the Fed’s preferred inflation gauge.

Annual PCE inflation rose from 2.5% in February 2024 to 2.7% year-on-year in March, exceeding forecasts of a 2.6% increase. Additionally, core PCE inflation, which excludes energy and food items, surpassed predictions (2.8% vs. 2.6%).

The policy-sensitive 2-year Treasury yields closed the month above the 5% mark, reaching the highest levels since Nov. 13, 2023.

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