April was a brutal month for both stock and bond investors and so far May is down, too. Seldom do stocks and bonds move the same direction. Almost never. They are both falling now.

There have been few places to hide. I expected volatility, but not like this. As always, there are stocks and there are stocks. Some move with the market, others don’t. Energy stocks are up 40% year-to-date and utilities and consumer staples stocks are unchanged. Everything else is down to one extent or another. Nasdaq suffered the most.

On the income side prospects for rate increases have weighed on bonds and income vehicles. All are off. Those that have held best are positioned to benefit as interest rates rise, as they surely will.

Just how far rates will rise is another matter. Economists think they know. A recent survey of more than 50 economists showed a mixed outlook. They see the “end” or “terminal” rate for Fed funds being 3.08% next summer. The terminal rate is where it would be when the rate-increasing cycle ends. It is now close to 1%. To reach 3.08% would require a series of increases and the bond crowd has already priced them in.

For stock investors the road ahead will be bumpy. With interest rates rising economic growth will be slower than had been expected. Profit growth will slow, too, and valuations will be under pressure. One-third of economists expect a recession.

I am hearing that R word more and more. Whether we’ll have one a year from now or sooner is anyone’s guess. Some day, yes, there will be another recession. Count on it. But likely not this year. A few reasons.

First, people are out shopping. They are in stores and restaurants. Consumer spending is strong. Visa and Mastercard see it. People are traveling or making plans to travel soon. Business travel is picking up, too. Those are not signs you would see ahead of a recession.

Until some of the unknowns become clearer — including the war and global Covid and growth problems — stocks will have a hard time making much headway. Still, I’ll give an upbeat note. The Fed has raised rates by 50 basis points before, several times since the 1960s. In all cases, while the market usually fell initially the S&P was higher 12 months after the first 50 BP boost by an average 7.2%. Some comfort.

David Vomund is an Incline Village-based Independent Investment Advisor. Information is found at http://www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.