Economic Update 3-05-2024
- Economic data for the week included a minimal revision downward for 4thquarter U.S. GDP growth, strong personal income results and continued decelerating PCE inflation, stronger home prices and new home sales, but weaker durable goods orders and ISM manufacturing data.
- Global equities saw gains, led by continued strength in the U.S., with sentiment prompted higher by restrained inflation. Bonds fared well for the same reasons which produced falling yields. Commodities gained as well, led by energy supply considerations.
U.S. stocks continued a trend of gains last week, with small caps outgaining large caps. ‘Growth’ again outperformed ‘value,’ with optimism over artificial intelligence continuing to drive near-term sentiment. By sector, technology and consumer discretionary each gained over 2%, followed by increases in energy and materials. By contrast, defensives health care, utilities, and consumer staples lost ground. Real estate also rose several percent along with falling yields.
A government shutdown was averted last week, with spending bills punted into mid- to late-March. Additionally, the cooler PCE inflation report helped markets breathe a sigh of relief, with weaker ISM manufacturing results boosting hopes for lower rates. Interestingly, as the U.S. stock market hits new highs, a variety of high profile shareholders/founders have been trimming their stakes in their firms—these include Amazon, JPMorgan, Meta, and Walmart. This likely coincides with higher overall U.S. equity valuations but could be due to company-specific idiosyncrasies as well.
Foreign stocks earned gains, led by Japan and Europe, but underperformed U.S. equities, with negative returns from the U.K. and emerging markets. European sentiment was held back a bit by stronger-than-expected inflation and falling economic sentiment.
Bonds gained along with yields falling back last week, along with the PCE inflation and weaker manufacturing data. U.S. Treasuries outperformed investment-grade corporates and high yield, which in turn outgained floating rate bank loans. Corporate spreads widened a bit with the headwind of record-breaking debt issuance levels during the week. Foreign emerging market debt saw gains as well, despite little change in the U.S. dollar.
Commodities rose across the board last week, led by gains in energy and precious metals. Crude oil rose over 4% to $80/barrel, along with markets waiting for an OPEC+ decision about voluntary production cuts this coming week. Natural gas also spiked by 8% with lower inventory results and uncertain upcoming production rates.
|
Period ending 3/1/2024 |
1 Week % |
YTD % |
|
DJIA |
0.00 |
4.09 |
|
S&P 500 |
0.99 |
7.97 |
|
NASDAQ |
1.76 |
8.55 |
|
Russell 2000 |
3.00 |
2.62 |
|
MSCI-EAFE |
0.72 |
3.23 |
|
MSCI-EM |
-0.30 |
0.27 |
|
Bloomberg U.S. Aggregate |
0.47 |
-1.30 |
|
U.S. Treasury Yields |
3 Mo. |
2 Yr. |
5 Yr. |
10 Yr. |
30 Yr. |
|
12/31/2023 |
5.40 |
4.23 |
3.84 |
3.88 |
4.03 |
|
2/23/2024 |
5.46 |
4.67 |
4.28 |
4.26 |
4.37 |
|
3/1/2024 |
5.42 |
4.54 |
4.17 |
4.19 |
4.33 |
Sources: LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research. Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends. Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.