April 15, 2024

Financial Markets

  • The positive momentum in global equity markets from late 2023 continued in the first quarter with major U.S. indices hitting multiple record highs. Certain foreign indices also hit new highs.  Growth stocks outperformed value, despite a rally in energy stocks, due to continued strength in technology and communications stocks.
  • In a reversal of the prior quarter, government bond yields moved higher as surprisingly strong economic data and sticky inflation data shifted interest rate forecasts to fewer cuts in 2024 and a later start to cuts.
  • The price of West Texas Intermediate crude oil rose 17% during the quarter due to supply cuts by OPEC+ amid strong demand. The price of gold hit new highs.  The U.S. dollar strengthened as better than expected economic data pointed to high for longer interest rates.

Overview of the Economy

  • Earnings reports for the fourth quarter were better than expected with a majority of companies beating analyst forecasts helped by solid sales growth.
  • The U.S. economy continued to show resilience with a 3.4% annualized growth rate in the fourth quarter due in large part to consumer spending and non-residential investment spending. The labor market remains strong despite a slightly lower number of job openings with over 200,000 new jobs added in both January and February.
  • Inflation has proven to be sticky with certain measures moving higher during the quarter and energy prices up.
  • Surveys continue to show weak manufacturing activity around the world although with some improvement while services activity remains in expansion.

Notable Events

  • The Federal Reserve Open Market Committee (Fed) kept the fed funds rate and its projection for the rate at year-end steady. Most central banks also held rates steady and indicated cuts could come sometime this year.