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March Market Insights

Stocks rise as market bets on economy’s resilience amid higher rates.

Article published: April 03, 2024

By: Neil Gilfedder, CFA® Chief Investment Officer

The markets gained in March, with U.S. and international stocks rising along with U.S. bonds, all of which was good news for broadly diversified portfolios.

U.S. large-cap stocks (S&P 500) gained 3.22% while small caps (S&P 600) rose 3.24%. Emerging-market stocks (MSCI Emerging Markets) increased 2.48% and developed-market international stocks (MSCI EAFE) gained 3.29%. The Bloomberg U.S.Aggregate Bond Index, a broad measure of bonds, rose 0.92%.*

WHY IT HAPPENED

Stocks drew strength from the economy’s ability to power through a higher interest-rate environment amid sticky inflation.

March kicked off with labor market data showing that hiring was moving at a brisk pace and that the unemployment rate remained near historical lows. Other economic reports showed consumer spending growth and consumer sentiment hitting a nearly three-year high. Meanwhile, companies in the S&P 500 are projected to report their third straight quarterly earnings growth.

Amid these economic tailwinds, government data showed that the inflation rate rose to 3.2%.That was higher than expectations and followed reports in the previous month showing inflation running hotter than anticipated. On the heels of the inflation data, the market reduced the number of rate cuts it expects from the Federal Reserve.

Yet, global stocks hit more record highs in March. This is a shift from previous months when the market declined after data threatened to derail the Fed’s expected rate cuts. The market now seems to be betting that the U.S. economy no longer needs the number of rate cuts that the market had previously thought it did to chug along and support stock prices.

WHAT IT MEANS FOR YOU


The shift in the market’s focus seen in March should be a reminder that the market is always dynamic and can change unexpectedly. We believe a long-term portfolio that is highly diversified has the best chance of mitigating investment risks amid unpredictable market conditions. That’s why the diversified portfolios at 91̳ Engines are allocated across a number of asset classes. If you have any questions about your portfolio, please don’t hesitate to contact your financial planner.

* Index return data provided reflects “total return,” which includes income generated by securities held within the index, such as dividends and interest. Because it includes income, index total returns can differ from index price returns that only consider prices.

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An index is a portfolio of specific securities (such as the S&P 500, Dow Jones Industrial Average and Nasdaq composite), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index.

Investing strategies, such as asset allocation, diversification or rebalancing, do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. All investments have inherent risks, including loss of principal. There are no guarantees that a portfolio employing these or any other strategy will outperform a portfolio that does not engage in such strategies.

Past performance does not guarantee future results.


Neil Gilfedder, CFA®

Chief Investment Officer

As executive vice president of investment management and chief investment officer, Neil oversees the team that manages investments for all 91̳ Engines clients. Neil directs the investment management operations and evolution of our proprietary investment methodology. Neil received a bachelor's degree in philosophy and economics from the University of York and a master's degree in economics from Stanford University.