March 2024 Market Recap

Highlights

    • The U.S. labor force continues to appear healthy.
    • The markets added to their gains, placing stocks solidly in positive territory so far in 2024.
    • Interest rates were relatively unchanged during the month.
    • Investors continue to wait for signs on the Fed’s next move.

 

Economic Update

Employment

The labor market showed strength in March. Nonfarm payrolls increased 303,000 for the month, beating consensus expectations of 214,000. Gains for January and February were also revised upward by a total of 22,000, bringing the net gain including revisions to 325,000.

The overall unemployment rate ticked back down to 3.8% in March from 3.9% in February. Historically, since the late 1940s, the economy has witnessed 150 months with the unemployment rate below 4.0%, with forty-seven of those months occurring since the second quarter of 2018. This current streak of persistently low unemployment is reminiscent of a similar period between December 1965 and January 1970 when the unemployment rate remained below 4.0% for all but three months.

 

 

Stocks and Bonds

Equities continued their rally from February with additional gains in March. The S&P 500 rose 3.2%, the Dow Jones Industrial Average advanced 2.2%, and the NASDAQ tacked on 1.8%. Mid-cap and Small-cap stocks bested large-caps in March as the S&P 400 added 5.6% and the Russell 2000 rose 3.6%.

The S&P 500 posted eight additional new closing highs in the month of March, bringing the total for 2024 to 22 so far.  The Magnificent Seven have turned into the Fabulous Four. Nvidia, Microsoft, Meta Platforms, and Amazon are responsible for 47% of the S&P 500’s 10.6% total return YTD. Of the remaining three Magnificent Seven, Tesla is down nearly 30% YTD, making it the worst performing stock in the index, Apple is off by 10.8%, and Google parent, Alphabet, while up 8%, is behind the S&P 500 so far this year.

Looking abroad, developed markets were up 3.4% as measured by the MSCI EAFE Index, and the MSCI Emerging Markets Index returned 2.5%.

 

 

At the sector level, Consumer Discretionary was the only group to show a modest loss for the month (-0.1%). Energy was the leader, rising 10.5% on the back of higher crude oil prices, followed by Utilities and Materials with gains of 6.6% and 6.5%, respectively.

 

 

Treasury yields were muted during the month.  The 6-month treasury bill rose eight basis points, the most of any duration. Further out on the curve, yields were down modestly. From a performance perspective, fixed income benchmarks saw positive performance ranging from +0.5% to +1.2%.

Bond traders continue to monitor inflation data in an attempt to discern potential cues indicating the Federal Reserve’s timing and magnitude for any prospective interest rate cuts.

 

 

Calm Waters 

As we conclude the first quarter of 2024 markets have been good to investors. The S&P 500 is up over 10% for the first three months. In recent years, only 2012 and 2019 experienced a better start to a calendar year (up 11.6% and 13.1%, respectively.)

As mentioned earlier, the S&P 500 closed at a new all-time high twenty-two times and surpassed 5,100 and 5,200 on a closing basis.

It seems difficult to believe, but in late-October the S&P briefly dropped to 4,100. Since that time, the index has rallied by over 28%.

As the chart below shows, the maximum drawdown for the S&P 500 so far this year is just under 2%. Meaning that if the year ended today, it would be the smallest drawdown ever recorded. Only 1995 comes close with a maximum drawdown for the year of -2.5%. In a typical year, the market will experience a drop of at least 14%.

 

Should any of this change how you view your investments? In our opinion, not in any material way. If you are a regular reader of our quarterly investment updates you know that our affection for stocks ranges from “Like,” “Really Like,” and “Love.”  Periods of calm are often followed by periods of higher volatility and vice versa. It is important to be mentally prepared for the inevitable spikes in volatility following times of calm.

We continue to believe that time in the market, which will allow a portfolio of stocks to compound over the long run, remains the surest way to build and maintain wealth.

 

 

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Pittenger & Anderson, Inc. does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.  Additionally, the information presented here is not intended to be a recommendation to buy or sell any specific security.  To learn more about our firm and investment approach, check out our Form ADV.

 

To view this article and others like it online, visit the P&A blog at https://pittand.com/blog/.

Click here to download the PDF version of this article.

 

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