Quarterly Market Review: Jan - March 2024

10-minute read | April 5, 2024

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Available through CUSO Financial Services, L.P.*

Adrian A. Hedwig

Financial Advisor, CUSO Financial Services, L.P.*
Available by appointment at all Salal Credit Union branches.
Virtual and phone meetings also available.
P: 206.607.3481
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U.S. Markets

Stocks notched solid gains in the first quarter as enthusiasm about artificial intelligence, signs of a soft landing, and dovish talk from the Fed buoyed investor confidence.

For the quarter, the Dow Jones Industrial Average rose 5.62 percent, the Standard & Poor’s 500 Index gained 10.16 percent, and the Nasdaq Composite picked up 9.11 percent.¹

Rocky Start in Q1

Stocks saw modest gains in January as positive economic data (retail sales, gross domestic product [GDP] report) and upbeat Q4 corporate reports helped offset a mixed inflation update. As expected, the Fed kept rates unchanged at its January meeting. The more neutral language used by the Fed led some to believe the Fed was concerned about inflation and might be slow to adjust rates. That news took the wind out of stocks’ sails, curtailing gains for the month.²

Building Momentum

In February, stocks regained some momentum as investor enthusiasm surrounding artificial intelligence overshadowed the Fed’s next move with interest rates. By mid-month, investors’ attention shifted to any company offering an artificial intelligence update in its quarterly report.

Marching Onward

Mostly positive economic news in March—including strong but moderating GDP growth, steady unemployment, and decelerating inflation—propelled stocks. All three averages set record highs during the month.³

At its March meeting, the Fed left rates unchanged and signaled its inclination to cut interest rates three times this year—each time by a quarter of a percentage point. Markets rallied to new highs following the news, which led to the S&P having its best first-quarter performance in five years.

Sector Scorecard

The Q1 rally was generally broad-based, with all but one major sector of the S&P 500 Index posting gains for the quarter. Energy (+12.57 percent) topped the pack of double-digit leaders that included the tech-heavy Communications Services sector (+12.37 percent), Financials (+12.02 percent), and Industrials (+10.50 percent)—all of which outperformed the overall index.

Materials (+8.59 percent), Health Care (+8.32 percent), Technology (+8.20 percent), Consumer Staples (+6.01 percent), Consumer Discretionary (+2.56 percent), and Utilities (+3.66 percent) also notched solid positive returns, further demonstrating how market leadership broadened beyond tech-related names over the quarter. Real Estate (-1.32 percent) was the sole sector to finish in the red.

Q4 Sector Scorecard

For the quarter, all industry sectors except Energy (−7.25 percent) ended higher, including Communications Services (+10.81 percent), Consumer Discretionary (+11.08 percent), Consumer Staples (+4.68 percent), Financials (+13.36 percent), Healthcare (+5.93 percent), Industrials (+12.44 percent), Materials (+8.90 percent), Real Estate (+17.58 percent), Technology (+17.42 percent), and Utilities (+7.47 percent).3

U.S. Market Recap*
March 2024 (%)Q1 2024(%)YTD (%)
S&P 5003.1010.1610.16
Russell 1000
10-Year Treasury Notes4.210.340.34

What Investors May Be Talking About in April

The Fed opens its two-day meeting on April 30, and investors can expect the Fed to look closely at the drivers of inflation. The Fed will examine each component of the Consumer Price Index, which measures the prices of consumer goods and services across more than 200 categories.⁶

In January, more than two-thirds of the CPI’s 3.1 percent was driven by the category called shelter, which includes rent prices. Shelter was sticky again in February and has been one of the most stubborn areas for some time.

The Fed will be watching shelter and other key categories to see what’s driving inflation as it evaluates whether to adjust short-term rates at some point this year.

World Markets

The MSCI EAFE Index rose 5.06 percent during the first quarter on signs that the European Central Bank and others were considering cutting short-term rates. In fact, Switzerland’s Swiss National Bank cut its main policy rate in late March⁸.

In Europe, Spain (+9.63 percent), Italy (+14.49 percent), Germany (+10.39 percent), the United Kingdom (+2.83 percent), and France (+8.78 percent) all posted gains for the quarter.⁹

Pacific Rim markets also trended higher, with Japan (+20.63 percent) and Korea (+3.44 percent) leading.¹⁰

World Market Recap
Index – EmergingMarch 2024 (%)Q1 2024 (%)YTD (%)
Hang Seng (China)0.18-2.97-2.97
KOSPI (Korea)3.953.443.44
Nikkei (Japan)3.0720.6320.63
Senex (India)1.591.951.95
EGX 30 (Egypt)-7.187.997.99
Bovespa (Brazil)-0.71-4.53-4.53
IPC All-Share (Mexico)3.880.310.31
ASX 200 (Australia)1.954.034.03
Index – Europe
DAX (Germany)4.6110.3910.39
CAC 40 (France)3.518.788.78
IBEX 35 (Spain)10.739.639.63
FTSE 100 (United Kingdom)4.232.842.84
IT40 (Italy)6.6714.4914.49


Gross Domestic ProductLed by consumer and government spending, the U.S. economy grew at a 3.4 percent annualized rate in the fourth quarter, revised up from the initial estimate. The GDP was higher than expectations but slower than the
4.9 percent expansion in the third quarter.

EmploymentEmployers created 275,000 jobs in February, besting expectations. The unemployment rate increased to 3.9 percent while average hourly earnings increased slightly less than expected.¹²

Retail SalesRetail sales rose 0.6 percent in February, just short of expectations.¹³

Industrial ProductionIndustrial output edged up 0.1 percent in February following
a 0.5 percent drop in January, as manufacturing appeared to recover from unseasonably cold winter weather.

HousingSingle-family housing starts rebounded in February thanks to milder weather, climbing 11.6 percent. That compared with a drop in January.¹⁵

Sales of existing homes increased 9.5 percent in February to a seasonally adjusted annualized rate of 4.38 million units, the largest monthly gain in a year. Higher demand boosted the median sales price by 5.7 percent to $384,500, the eighth straight month of year-over-year increases.¹⁶

New home sales in February slipped 0.3 percent over the prior month but increased by 5.9 percent over February last year.¹⁷

Consumer Price Index(CPI)Consumer prices rose 0.4 percent in February and were up 3.2 percent from a year ago—a bit hotter than economists expected but cooler than investors feared. Energy and shelter accounted for more than 60 percent of February’s gain, while two-thirds of January’s gain came from shelter.¹⁸

Durable Goods OrdersOrders of manufactured goods designed to last three years or longer rebounded 1.4 percent in February, beating expectations.¹⁹

The Fed

The Fed left rates unchanged in the first quarter. After its January 31 meeting, the Federal Open Market Committee used more neutral language in its policy document and indicated a subtle shift from considering rate cuts to proposing they could be possible unless inflation became a concern. However, they cautioned that cuts weren’t automatic and would only consider them if inflation dangers had abated.²⁰

At the March meeting, the Committee also left rates unchanged but signaled its inclination to cut interest rates three times this year. That was a positive surprise for some investors who worried about the Fed’s commitment to adjusting rates.²¹

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