The bulls regained their grip on the stock market in the first few trading days of April, and as such, most major stock market indexes continued their ascent that began at the end of March.

However, the bears got the upper hand in  early April, as many investors focused again on the Iraq war. The news of heavy casualties  and fatalities endured by U.S. soldiers daily throughout April   was very disconcerting to many Wall Street investors.

Against this backdrop, crude oil prices continued to rise in April to near forty dollars per barrel  as crude oil speculators and investors worried that the Iraq quagmire could have the potential to disrupt the vital oil supply that the Middle East supplies to the world.

Adding fuel to the fire of escalating crude oil prices was the decision by OPEC to reduce crude oil production on April first.
Most major stock market  in

dexes continued to decline throughout April  as a mirror image of the rise of crude oil prices daily.

Many stock market investors theorized that at some point rising crude oil prices would choke off  the   U.S. economic rebound. They feared that  debt laden consumers would cut back on their discretionary spending in order to  purchase their vital gasoline as prices rose almost every day.

The employment report for the month of  March was  released  the first Friday of April.  It disclosed that more than 300,000 new jobs were created in the U.S. economy,  adding more angst for both stock and bond market bears fearing inflation was ahead.

The bond market remained in lock-step with the stock market throughout April, as bond prices fell with stock prices, raising interest rates from their forty year lows.
The stock and bond markets continued to decline in early

May  due to the rhetoric of the Federal Reserve (Fed) at their regular scheduled meeting.  The Fed was now concerned about the potential for rising inflation in the     U.S. Economy. The Fed  indicated in its statement to the public that it was  ready to raise short-term interest rates in the near future in a "measured" way to combat the resurrection of inflation.


The stock and bond market bears were energized when the employment report for the month of April was released on the first Friday of May.  It reaffirmed that the anemic labor market was on the mend generating more than 300,000 new jobs.


Bond market investors were spooked that with such robust job creation  the Federal Reserve (Fed) would certainly raise short-term interest rates to thwart the potential for inflation rising as the U.S. economy grew.