Q1 2024 Market Commentary
Stocks continued to provide positive returns during the first quarter. The S&P 500 returned more than 10% for the quarter, setting multiple new all-time highs. As we have discussed in prior commentaries, the first quarter saw a significant shift in sentiment, as investors now only expect three interest rate cuts this year as compared to six at the start of the year.
This change in expectations came as inflation progress slowed and the U.S. economy continued to expand despite higher interest rates, both of which signal a need for fewer rate cuts. We were skeptical of the need for six rate cuts entering 2024 and we want to once again reiterate that investors should not necessarily expect multiple rate cuts during 2024.
Equities Have a Strong Quarter
As mentioned above, the stock market is off to a strong start this year, with the S&P 500 Index gaining 10.16% in the first quarter. Shortly after the January 2022 all-time high in the S&P 500, the Federal Reserve started its campaign of aggressive interest rate hikes as inflation spiked to a 40-year high. As we painfully remember, there was a stock market selloff in 2022 as investors feared that higher interest rates would slow the economy.
The January 2022 all-time closing high held throughout all of 2022 and 2023, but it’s already been eclipsed multiple times in 2024. After trading below its prior all-time high for over two years, the S&P 500 Index has set 22 new all-time closing highs this year.
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Important Disclosures: The report herein is not a complete analysis of every material fact in respect to any company, industry or security. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Any market prices are only indications of market values and are subject to change. The information contained herein is based on technical and/or fundamental market analysis and may be based on data obtained from recognizable statistical services, issuer reports or communications or other sources believed to be reliable. However, such information has not been verified by us, and we do not make any representations as to its accuracy or completeness. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Index returns are not fund returns. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results. Yields are given as of 10/1/2023.Bonds are subject to price and availability.
The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock’s weight in the Index proportionate to its market value. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index. The NASDAQ 100 Index is an unmanaged group of the 100 biggest companies listed on the NASDAQ Composite Index. The list is updated quarterly and companies on this Index are typically representative of technology-related industries, such as computer hardware and software products, telecommunications, biotechnology and retail/wholesale trade. The MSCI EAFE Index is designed to represent the performance of large and mid-cap securities across 21 developed markets, including countries in Europe, Australasia and the Far East, excluding the U.S. and Canada. The MSCI Emerging Markets Index is designed to represent the performance of large- and mid-cap securities in 24 Emerging Markets. Bloomberg U.S. Aggregate Bond Index is a broad-based measure of the investment grade, US dollar-denominated, fixed-rate taxable bond market.
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