The bears maintained their hold on the stock market throughout April, and as such, most major stock market indexes continued their decline.

The economic news that was disseminated to the public throughout April depicted the U.S. economy on firm footing albeit, growing at a lackluster pace.

The engine driving the economy remained the real estate sector. Home prices continued to soar in most of the U.S. bolstered by the lowest interest rates in four decades, and the lending policies offered to eager home buyers by many financial institutions.

The Federal Reserve (Fed) continued to face their “conundrum” of why long-term interest rates continued to decline throughout April even though that had raised short-term interest rates significantly since June 2004.


Ironically, the stock market

that was on a free-fall before the Fed’s regular scheduled meeting on April 22nd, actually had a mini-rally right after the Fed raised short-term interest rates for the seventh time in a row.

This stock market rally was short-lived and April ended with most stock market, indexes in a funk, near their lows that they set for 2005.

On the geo-political front, the War in Iraq continued with its violent ferocity, as daily bombings continued without a reprieve.

The public continued to ignore the quagmire that the Iraq war posed for the U.S. military.

The financial markets followed the U.S. public’s apathy about the disaster in Iraq and the potential risks it posed for the U.S. economy.

The bulls remained in control of the stock market when May began. They thought of the Fed’s next meeting on May

3rd had no impact on the resolve of stock market investors to gobble up stocks again.

The Fed once again raised short-term interest rates 1/4% at their meeting in early May. This was the eighth time in a row that the Fed raised short-term interest rates.

The bond market continued to shrug off the Fed’s determination to raise interest rates to thwart the rise of inflation. Most long-term bond yields continued to hover at near forty year lows.

The stock market in May took a respite in the middle of the month as bullish investors took some of their profits, bringing down most major stock market indexes near their lows for 2005.

Crude oil prices stayed above $50 barrel throughout May, albeit, below the $57 barrel set in early 2005.