The first quarter of the year proved to be a robust period for the stock market, with the S&P 500 showcasing its best performance since 2019. Despite modest gains on Thursday, the index reached its 22nd all-time high, accompanied by the Dow Jones Industrial Average setting a record with a slight increase. However, the Nasdaq Composite experienced a minor setback with a slight decline.
The optimism among investors at the beginning of 2024 stemmed from significant gains in stocks the previous year, particularly driven by megacap tech shares. However, the extent of the rally exceeded many expectations, fueled by various factors such as a resilient economy, excitement surrounding advancements in artificial intelligence technology, and anticipation of interest-rate cuts throughout the year.
Zachary Hill, head of portfolio management at Horizon Investments, remarked on the surprising strength of the quarter, attributing it to solid fundamental support for market movements. Year-to-date, the S&P 500 has surged by an impressive 10%.
The upward momentum in the stock market was further reinforced by revised government estimates revealing stronger-than-expected growth in the U.S. economy during the fourth quarter. Additionally, a University of Michigan survey indicated a significant uptick in consumer confidence to its highest level in nearly three years.
Investors eagerly await fresh data on consumer spending and the Federal Reserve’s preferred inflation gauge scheduled for release on Friday. Notably, both the U.S. stock and bond markets will be closed for Good Friday.
Regarding interest rates, Fed officials maintained their projections for three interest-rate cuts this year during their policy meeting this month, aligning with forecasts from December. Fed governor Chris Waller emphasized the importance of patience, particularly in light of recent inflation readings surpassing expectations.
Despite the positive overall market sentiment, Dave Grecsek, managing director in investment strategy and research at Aspiriant, cautioned against complacency, highlighting ongoing concerns regarding inflation.
In individual stock movements, Walgreens Boots Alliance saw a 3.2% increase following quarterly results that exceeded Wall Street estimates, despite reporting a significant loss. Similarly, furniture retailer RH experienced a notable 17% surge in shares after predicting an uptick in customer demand amidst declining interest rates.
Conversely, shares of AMC Entertainment plummeted 14% after the movie-theater chain disclosed plans to sell up to $250 million worth of stock to strengthen its balance sheet. Additionally, shares of the parent company of Donald Trump’s Truth Social witnessed a 6.4% decline after experiencing a surge in its initial trading sessions.