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U.S. stocks on Thursday ended a terrific Q1 on a largely subdued note, after some cautious comments from a Federal Reserve speaker. Still, Wall Street's benchmark S&P 500 (SP500) index delivered its best first quarter performance since 2019.
The S&P (SP500) added 0.11% to settle at 5,254.35 points, a new record closing high. The blue-chip Dow (DJI) climbed 0.12% to finish at 39,807.37 points, while the Nasdaq Composite (COMP:IND) slipped 0.12% to conclude at 16,379.46 points.
Of the 11 S&P sectors, eight ended in the green.
For Q1 2024, the S&P 500 (SP500) notched an advance of 10.16%. The rally has seen the benchmark gauge achieve several historic milestones, including surging past 5,000 points for the first time ever on February 8, the 5,100 mark on February 23 and the 5,200 level last Wednesday. The bull run has been driven by interest rate cut expectations, soft landing hopes and a relentless rise in megacap technology stocks.
The Nasdaq (COMP:IND) put in a quarterly performance of +9.11% while the Dow (DJI) rose 5.62% for Q1. The S&P 500 (SP500) on Friday also backed up its best weekly jump of 2024 with another week of gains, increasing 0.39%. For the week, the Nasdaq (COMP:IND) was down 0.30% and the Dow (DJI) was up 0.84%.
"We’re seeing evidence of a trend we discussed going into this year. Despite the strong performance of AI-related stocks in the first two months, S&P 500 value (IVE) stocks have started to outperform S&P 500 growth (IVW) stocks. In fact, the IVE ETF hasn’t underperformed the IVW ETF since October 2023," Leo Nelissen, part of investing group iREIT on Alpha, told Seeking Alpha.
"Given today’s breakout in WTI Crude Oil (CL1:COM) and three consecutive months of higher-than-expected inflation, I continue to believe that the Fed will have to stick to a policy of tightening, making it likely that value remains the place to be. I would even make the case that the surge in tech/growth stocks this year will pave the road for a stronger rotation into inflation-proof stocks,” Nelissen added.
Some remarks from Fed Governor Christopher Waller on Wednesday evening weighed on traders in today's session. Waller said that there was "no rush" for the central bank to start cutting rates, as the economic data received so far this year has led to uncertainty "about the speed of continued progress." Waller added that he wants "to see at least a couple months of better inflation data."
The release of key inflation data on Friday - which is a holiday on account of Good Friday - and a speech by Fed chair Jerome Powell also probably kept investors on the sidelines and unwilling to make big moves.
Market participants received some solid readings on the economy on Thursday. Before the opening bell, the U.S. Bureau of Economic Analysis' final estimate of Q4 gross domestic product (GDP) growth was revised upward to an annual rate of 3.4% from a prior estimate of 3.2%. The data will likely please the Fed, which wants to see a strong economy amid inflation that is slowly coming into control.
Shortly after the start of regular trading, the University of Michigan's final reading of consumer sentiment in March improved to 79.4 from an earlier estimate of 76.5. Moreover, year-ahead inflation expectations ticked down to 2.9% from the previous estimate of 3.0%.
The economic calendar also saw the number of Americans filing for initial jobless claims in the past week falling to 210K, compared to a consensus of 212K. Additionally, the Institute for Supply Management said business activity in the Chicago area contracted for a third straight month in November. Finally, pending homes sales swung to a gain in February from a slump in January.
Turning to the fixed-income markets, Treasury yields were mixed. The longer-end 30-year yield (US30Y) was down 1 basis point to 4.35%, while the 10-year yield (US10Y) was little changed at 4.21%. The shorter-end more rate-sensitive 2-year yield (US2Y) was up 3 basis points to 4.63%.
See how Treasury yields have done across the curve at the Seeking Alpha bond page.