Weekly Market Update: March 29th, 2024

Market Data as of Week Ending: 3/29/2024 unless noted otherwise

Stock prices generally advanced last week as the S&P 500 reached another new record high. Investors responded favorably to economic data as equity market breadth improved, resulting in strong monthly gains across a wider group of stocks for the month of March. Small and mid-cap stocks outperformed their large-cap peers, and value generally outperformed growth last week. Sector performance within the S&P 500 was mostly positive, as nine of the eleven sectors delivered gains. Cyclical and defensive sectors such as energy, utilities, and real estate outperformed, while growth sectors such as information technology and communication services lagged. Foreign stocks were also higher for the week, but the MSCI EAFE lagged the S&P 500 for the week and is trailing by nearly 5% this year. MSCI Emerging Markets delivered a small gain and is underperforming the S&P 500 by more than 8% on a year-to-date basis.

Shorter-term interest rates were unchanged for the week as the 2-year treasury ended the quarter at 4.59%. The 2-year increased 0.36% since the beginning of the year as investors recalibrated expectations regarding Fed policy decisions. The 10-year U.S. Treasury yield narrowly declined to 4.59%, and the yield curve remains inverted with the 2-10 slope at -0.39%. Fixed income delivered gains across the curve last week as long-duration government bonds outperformed and short-term corporate bonds lagged. Yields on U.S. Corporate and High Yield Bonds were effectively unchanged, ending the week at 5.30% and 7.83%, respectively.

Economic data for the week was generally favorable as the final figure for fourth-quarter GDP was revised upward from 3.2% to 3.4%. Other notable revisions in the report were higher corporate profits (3.7% to 3.9%) and real consumer spending (3.1% to 3.3%). Durable goods surprised to the upside as new orders increased 1.4% in February, led by a strong rebound for transportation equipment. Even after excluding the volatile transportation segment, durable goods increased 0.5% after two consecutive monthly declines. Housing data was an area of weakness as new home sales came in lower than expected and declined compared to the prior month in February, following two consecutive monthly gains. PCE data was released on Friday and was largely in line with expectations as both core and headline PCE inflation increased 0.3% for the month. Core PCE, compared to the same period one year ago, declined to 2.8%. 

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