What conclusions should we draw from a high-flying first quarter?
Investors are feeling optimistic about 2024.
With the S&P 500 closing its fifth straight month of gains, it's clear that the bull market has legs. (6)
We can also see that the rally is broadening beyond a small number of technology stocks as investors build confidence in the economy. (7)
Broader confidence in company growth potential is great news for investors as it makes the rally less vulnerable to the individual fortunes of a few high-flying stocks.
When will interest rates drop?
That's the big question everyone is asking. As usual, interest rate forecasts are all over the place, with some economists predicting three rate cuts in 2024 and others saying the Fed may not cut rates at all. (8)
The Fed's official position is that conditions may support lower rates this year, but economists want to confirm trends in the data before pulling the trigger. (9) We likely won't see action before summer, if not later.
Will we still see a recession in 2024?
It's looking less and less likely that a recession is on the horizon. But, it's clear that the Fed's high rate policy is still reverberating through the economy. Some economists believe that the Fed is sprinting toward cutting rates to stave off a possible recession in 2025. (3)
Bottom line: we’re watching the data, staying flexible, and looking for opportunities.
Read more in this edition of Financial Quarterly.
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Sources:
1. https://www.cnbc.com/2024/03/27/stock-market-today-live-updates.html
2. https://www.cnbc.com/2024/03/20/fed-meeting-today-live-updates-on-march-fed-rate-decision.html
3. https://finance.yahoo.com/news/feds-rate-cut-projections-pointing-221015938.html
4. https://www.usnews.com/news/economy/articles/2024-02-20/leading-economic-indicators-no-longer-forecasting-a-recession
5. https://www.blackrock.com/corporate/insights/blackrock-investment-institute/interactive-charts/geopolitical-risk-dashboard
6. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/stock-rally-extends-to-5th-straight-month-in-march-as-s-p-500-rises-3-1-81057365
7. https://www.reuters.com/markets/us/wall-st-week-ahead-broadening-us-market-rally-gets-boost-dovish-fed-2024-03-22/
8. https://www.thestreet.com/fed/goldman-sachs-updates-when-fed-will-cut-rates-in-2024
9. https://www.statista.com/chart/29055/fomc-projections-for-the-federal-funds-rate/
The S&P 500 is a stock index considered to be representative of the U.S. stock market in general. The NASDAQ Composite Index is an unmanaged composite index of over 2,500 common equities listed on the NASDAQ stock exchange. The Dow Jones Industrial Average is a price-weighted index that tracks 30 large, publicly traded American companies. All index returns exclude reinvested dividends and interest. Indices are unmanaged and cannot be invested into directly.