I hope all is well with you. Stock market bulls were on parade during the first quarter of 2024, as the major U.S. stock indexes continued to extend gains from the final quarter of last year. 

With the books closed for the first quarter, I wanted to take this opportunity to offer an update on key developments.

S&P 500: Best Q1 Since 2019 

The S&P 500 found its way to its best first quarter since 2019, extending recent gains to a five-month win streak. 

The large-cap index and best gauge of the U.S. economy found strength early in the quarter via the AI theme, with NVIDIA contributing to the second consecutive positive quarter for the S&P 500. Some broadening into other sectors was a topic late in the quarter, with the energy and communication sectors finding buyers. 

Overall, for the first quarter of 2024, the S&P 500 increased by 10.16%, the Nasdaq 100 rose by 8.49%, and the Dow Jones Industrial Average saw a rise of 5.62%. 

Soft, Hard, or No Landing? 

Soft, hard, or no landing – the question remains whether the Federal Reserve will be able to pull off its inflation-fighting campaign without a recessionary impact.  

U.S. stock market bulls cheered the first quarter as investors gained more confidence in a “soft landing” (tamed inflation but no recession) amid inflation moderation. The prospect of perhaps “no landing” (no recession but persistent inflation) was also considered. Recent economic data since the end of Q1 add credence to the latter possibility.

Inflation Mixed for Q1 

Costs of goods and services are still rising annually, albeit at a slower pace than the peak of the recent inflation cycle. 

Metrics were mixed in the first quarter, with consumer inflation picking up in January (December data), easing in February, and then rising in March. 

The last Consumer Price Index (CPI) release of the first quarter showed a 3.2% rise year-over-year versus 3.1 % expected. Inflation is still running hotter than the Fed’s 2% target rate, but the market wants rate cuts. 

Labor Market 

Labor market resilience, based on government nonfarm payroll data, persisted throughout Q1. First-quarter data showed solid payroll gains (216,000 in December, 353,000 in January, and 275,000 in February) with all three months beating analyst consensus expectations. 

The data releases have been strong, indicating economic strength, but the initial figures are not quite conducive to the market’s desire for rate cuts. Downward revisions have come to the rescue somewhat.  

“Downward revisions” essentially means changes to the initial data releases in subsequent months. Data shows that the initial numbers have been revised lower for 10 of the last 12 months. 

Such revisions can help to bolster the case for Fed rate cuts, indicating a less strong labor market. 

Federal Reserve (Fed) Summary & Outlook 

The first quarter featured two Fed meetings, with the Fed leaving rates unchanged in January and March. The result is the same current target overnight lending rate of 5.25 – 5.50%, a 23-year high. 

While the Fed left rates unchanged at the most recent March meeting, the Fed did let us know that three 25-basis-point cuts are expected by the Federal Open Market Committee in 2024 via its Summary of Economic Projections (SEP). 

Markets loved Federal Reserve Chair Jerome Powell’s commentary at the post-meeting press conference, as all three major stock indices jumped to record high levels. However, on the last day of the quarter, Powell reiterated that the Fed needs to see more good inflation readings before it is ready to cut rates. This was further reiterated at Chairman Powell’s appearance earlier this week when he acknowledged that inflation and hiring have been firmer than expected this year.


What If the Fed Doesn’t Cut Rates?

Anything is possible. Market watchers were looking for six cuts; now, it has been whittled down to two or fewer for 2024. Yet, major U.S. stock indexes have risen while the number of cuts expected declined. 

Cutting rates with the economy running hot would defy conventional wisdom, and the “this time is different” narrative can be cause for concern for many veteran investors.  

It’s an election year, and the dynamics are multifaceted. We will see what future inflation and job data look like. 


Long-Run Planning

If you asked someone well versed in finance three years ago, “What would the stock market do if interest rates went from sub-1% to over 5% in three years”? 

Certainly, the overwhelming answer would have been for stock market declines during the rise in rates. These markets tend to defy conventional wisdom time after time; this is why long-term investing is a lifelong commitment with the fruits of time bearing themselves as a result of investor discipline. 


With the above quarterly recap noted, we would love to hear how things are going for you. If first-quarter market developments are on your mind, or if there is anything else we can help with, please feel free to reach out to your advisor—we are always here as a resource for you!

Be Well,

Andrew Fairman Signature

Andrew Fairman, CFA, CFP®

Chief Investment Officer

I hope you are doing well as we kick off 2024. 2023 was an eventful year in the U.S. financial markets, to say the least.

Given this, I imagine you may have some questions about what’s to come in 2024. With that, I present the Q4 2023 recap and 2024 outlook.  

U.S. Equities 

Strength, resilience, and logic-defying are words that come to mind for equities in 2023. March and October of 2023 had bears on the offensive, courtesy of regional bank concerns and high interest rates, respectively.

But fast forward to the end of the year, the S&P 500 had a 2023 return of 24.23%, the Nasdaq 100 rose by an astounding 53.81%, and the Dow Jones Industrial Average rose by 13.70%. 

Likely to be a headline theme heading into 2024, there is a lot of cash on the sidelines (i.e., uninvested cash). How much is a lot? Around a record $6 trillion, according to some measures compiled by Fundstrat. That figure is more than the sum of all non-housing debt (~$4.8 trillion) held by all Americans. 

This cash could help to provide equity market support in 2024 if it is invested into stocks this year. 

There’s been some tough sledding in the bond markets as investors have endured a three-year bear market with the benchmark 10-year Treasury yield trading in a wide range between 3.253% to approximately 5.0% throughout the year. Bond buyers were likely feeling better once interest rates moved lower toward the end of 2023 based on forecasts of interest rate cuts by the Fed in 2024.


Commodity Prices: Broadly measuring commodity prices using the S&P Goldman Sachs Commodity Index, we see that the index fell in 2023, indicating lower wholesale prices across a broad range of commodities. Ideally, this trickles down to the consumer if those corporations do not mark things up too much.    

Consumer Price Index (CPI): Government data shows that consumer inflation, as measured by the Consumer Price Index, peaked year-over-year in June of 2022 at 9.1% and declined steadily throughout 2023. However, it may not feel like it when you purchase goods and services. “Stuff” is still expensive, with service pricing and shelter pricing remaining stubborn. Core CPI (which excludes volatile food and energy) showed a rise of 3.9% year-over-year, according to the last release in 2024 of December data.

Election Year

On the note of the presidential election, associated volatility could find its way into markets. According to U.S. News, the S&P 500 has yielded an average of a 7% return in election years dating back to 1952. 

The election cycle could add more headlines to a market already massively driven by headlines, with investors weighing the economic policy of the potential presidential winners.

Federal Reserve Outlook

As major U.S. market indexes rose impressively in November and December, so did expectations for Federal Reserve (Fed) rate cuts. High hopes surrounded Fed rate cuts, but there was some disparity between the Fed’s commentary and the market’s pricing at year’s end.   

At the end of 2023, market expectations were for cuts to begin in March of 2024, with a total of six to seven quarter-point rate cuts priced in, according to the CME FedWatch Tool (CME FedWatch Tool, 2023). Yet, the Fed has broadcasted a message of three cuts in 2024. 

In fact, while Fed members see rate cuts as likely in 2024, the path remains highly uncertain, according to the December meeting minutes released on January 3rd. 

Fed officials were optimistic about the path of inflation in the meeting minutes, but market bulls who expected a super-dovish-sounding Fed ready to cut rates quickly and rapidly were left somewhat disappointed.  

Perhaps we have indeed seen a market that has gotten a bit ahead of itself on rate-cut hopes. On the day of the Fed meeting minutes release, markets were still pricing in the first rate cut of 2024 to occur in March to the tune of a 66.5% probability of a quarter-point cut at the March 20th meeting.

Long-Term Effects

As always, we will keep you apprised of what we know when we know it, with a focus on how what happens in the news and in the markets impacts your investments.  

However, I do encourage you as a long-term investor to keep in mind the markets of March 2020, and more recently, March and October 2023, when world events led to dips. Selling assets in a panic during Covid days, regional bank pressures, or times of rapidly rising interest rates has proven to be the wrong choice time and time again. 

Remember, in its 66-year history, the S&P 500 has delivered positive annual gains roughly 70% of the time. That’s not to say that the bumps in the road don’t deliver brutal news headlines and trigger emotions — but historically, remaining level-headed and disciplined puts the odds in an investor’s favor. 


Armed with that wisdom, let’s keep in mind the benefits of long-term investing as we head into a new year. And, of course, if there is anything on your mind regarding stocks, interest rates, the Fed, or your portfolio, please feel free to reach out to your advisor. We are always here as a resource for you. 


Be Well,

Andrew Fairman Signature

Andrew Fairman, CFA, CFP®

Chief Investment Officer