Everything to Know about Macro and Markets
The S&P 500 (SPX) rallied at the end of the holiday-shortened week, reversing its previous three-day losing streak and clocking in its 22nd record high this year. The broad-market benchmark closed March in the black, registering its fifth-straight monthly gain; its first-quarter gain of almost 11% was the best in five years. The blue-chip index Dow Jones Industrial Average (DJIA) clinched another record high, enjoying its best first quarter since 2021.
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Technology benchmarks Nasdaq Composite (NDAQ) and Nasdaq 100 (NDX) lagged over the past week, registering small declines as investors took profits after a record-setting run from their October lows. However, the tech indexes also had a blockbuster first quarter with over 10% gains. The big four equity benchmarks each posted a second straight quarter of gains.
During Q1, stocks as well as most other financial assets, including gold and cryptocurrencies, rallied on investor enthusiasm strengthened by an improving economic outlook, resilient profits at large companies, and optimism regarding Artificial Intelligence (AI). Coupled with the anticipation of imminent Federal Reserve rate cuts, these factors led to a significant broadening of the stock rally, with the small-cap Russell 2000 index outperforming all four of its large-cap counterparts in March.
Macro News in Focus
Investors received even more reasons for optimism on Thursday, as new data confirmed the economy’s strength. Q4 2023’s GDP grew at an annual rate of 3.4%, more than previously estimated, while consumer confidence rose to its highest levels in almost three years. The weekly unemployment claims fell, underscoring job market strength.
The Fed Governor Chris Waller spilled some cold water on rate-cut expectations, however, saying that the central bank is “in no rush” to lower interest rates, as the labor market remains tight, and inflation continues to worry policymakers. However, it did little to reduce investor enthusiasm, as a robust economy is expected to continue propping up corporate earnings. Most money managers don’t see an imminent recession in the next 12 months, a stark turnaround from the end of last year.
Stock markets, closed for observance of Good Friday, were unable to react to the release of the Core Personal Consumption Expenditures Price Index (Core PCE), as well as to Jerome Powell’s speech at the San Francisco Fed.
While the Fed’s preferred inflation gauge cooled down from last month, in line with expectations, other indicators flashed red, sending a reminder that the economy is still running too hot. Thus, Personal Spending surged in February, providing additional evidence that the inflation decrease is not yet sustainable. The Fed Chair confirmed Waller’s view that monetary policy easing would not be appropriate until policymakers are certain that inflation is on track toward their 2% target.
S&P 500 Top Gainers and Losers in Q1 2024
¤ The Winners: Super Micro Computer (SMCI) and Deckers Outdoor (DECK), the newest additions to the benchmark index, clocked in 254% and 40% gains, respectively, over the quarter. The AI poster child Nvidia (NVDA) surged 88%, while electricity producer Constellation Energy Corporation (CEG) rose 60%. General Electric (GE) gained 40% over the quarter.
¤ The Losers: Tesla (TSLA) was the worst-performing stock in the SPX cohort with a quarterly loss of 29%. Humana (HUM) was the second from the bottom with a loss of over 26%, followed by Charter Communications’ (CHTR), Boeing’s (BA), and Lululemon Athletica’s (LULU) drops of 25%, 23%, and 22%, respectively.
Upcoming Earnings and Dividend Announcements
The Q4 2023 earnings season is over, but several newsworthy earnings releases are scheduled for this week.
This week’s most notable earnings reports will be published by Lamb Weston (LW), Paychex (PAYX), Acuity Brands (AYI), Levi Strauss (LEVI), RPM International (RPM), and Conagra Brands (CAG).
Ex-Dividend dates are coming this week for Comcast (CMCSA), Cisco Systems (CSCO), Campbell Soup (CPB), JPMorgan Chase & Co. (JPM), Bristol-Myers Squibb (BMY), and other dividend-paying firms.
For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.
