Market Commentary
February 2024 Review – Looking Forward
February continued the positive market performance. All indices participated in the upside as the market broadened out to sectors other than Technology. Both the S&P 500 and NASDAQ hit all-time highs. Q4 earnings season is close to complete. U.S. earnings growth is +8% year over year as companies have beat expectations, and revenue growth is up +4% year over year. Consumer Discretionary +7.6%, Materials +5.7% and Industrials +5.5% drove February performance. Small-caps are still lagging.
S&P 500: Feb +5.17% YTD +6.84%
DOW: Feb +2.22% YTD +3.47%
NASDAQ: Feb +6.12% YTD +7.20%
Russell 2000: Feb +5.46% YTD +1.31%
Sector Performance YTD:
Communication Services +10.8%
Consumer Discretionary +4.7%
Consumer Staples +3.5%
Energy +2.0%
Financials +7.0%
Healthcare +6.0%
Industrials +6.0%
Materials +2.1%
Real Estate -2.5%
Technology +10.3%
Utilities -2.6%
Current U.S. Treasury Yields:
6 Month Bill 5.29%
2 Year Note 4.63%
5 Year Note 4.21%
10 Year Note 4.23%
30 Year Note 4.35%
The Fed and the Economy:
Fed Chair Powell will be speaking on Wednesday. Powell will get asked by reporters, looking for a definitive rate cut timeline, when will cuts begin. Rate cuts are clearly off the table any time soon. Personal Consumption Expenditures Price Index (PCE) for January increased 0.4% (excluding food and energy) from December. This was in line with inflation expectations and strengthens the Fed stance of going slow on rate cuts. It also benefits stocks as evidenced by more cash rolling out of Money Market funds and into equities. Interestingly, Money Market funds have still been adding deposits, hitting $6.06 trillion to end February. The funds are coming from bank deposits with lower yields. GDP advanced 4.9% in Q4, exceeding the estimated 2% increase.
The labor market remains tight. Consumers are still spending, albeit less so, and personal savings ticked up. Sales of existing homes rose 3.1% in January, while new home sales increased 1.5%. Mortgage rates ended the month at 7.55% for a 30-Year Fixed.
Germany is still struggling and in recession. The UK’s inflation rate remained unchanged at 4%. France is cutting spending as it anticipates a weaker economy. Eurozone inflation fell to 2.6%, well down from its high of 10.6%. China’s real estate woes continue and add to its deflation, unemployment, and declining exports issues. Japan’s stock market hit a high not seen there for 34 years. However, it’s economy has technically entered recession. The country not only has an aging population but a shrinking one. A weak yen is eating into export profits.
Looking Forward:
We anticipate that the stock market will continue to perform well. The broadening out of sectors adding to positive performance, other than just Technology, will gain traction. The market seemingly has put rate cuts out of the analysis and has focused on earnings and forward guidance. Both have been excellent. Money Market fund yields are still delivering almost 5% interest, and coupled with stocks, make bonds and duration less interesting. Global issues have potential to disrupt the current market momentum. Barring any, there will be normal volatility with an upward bias. We are optimistic for a positive year.
Past Market Commentary
January 2024 Review – Looking Ahead
January continued the positive stock market momentum. Microsoft continues to be the performance front runner with solid Q2 earnings. Alphabet and Apple received tepid market reactions. Meta was enthusiastically bought on a tremendous earnings print. Amazon also delivered sterling results. Though the markets had broadened out during the month, Technology continues to drive the overall
December 2023 Review – Looking Ahead
December continued the upward market momentum begun in November. Exuberance over the possibility of Fed rate cuts carried the catchup/Santa Claus rally trade through to year-end. Small-cap outperformed while the Magnificent 7 continued to trade higher. A remarkable year in the markets, with plenty of ups and downs, highlighted by the concentration of just a
November 2023 Review – Looking Ahead
November delivered positively for the stock market. Building on third quarter earnings, the market finally started to broaden. All four indices managed to finish over +8% for the month with the NASDAQ over +10%. Technology was November’s big performance winner at +17%, followed by Consumer Discretionary at +13%, with Financials delivering +10.2%. All sectors rallied
October 2023 Review – Looking Ahead
The month of October ended with an upswing in the last two trading days. This carried over into November’s trading. The combination saw the S&P 500 up 6% last week. However, all of the market indices finished down for October. The Technology sector was flat for the month. The Super 7 Technology names were mixed…On
September 2023 Review – Looking Ahead
The rise in the U.S. Dollar, as measured against the Euro and other currencies, ended September at a nearly 12-month high. The U.S. Oil and International Crude indices recorded the highest prices since Russia invaded Ukraine in early 2022. At a yield of 4.77%, the 10 Year U.S. Treasury is at levels not seen since
August 2023 Review – Looking Ahead
August chipped away at July’s gains despite the end of month rally. Small-cap stocks performed the worst. Most of the month witnessed a sell on the news mentality and profit taking. Money Market funds hit an all-time high of $5.58 trillion as $14.37 billion rotated in as U.S. Treasury yields retreated. 79% of S&P 500