Watch the CPK Market Action Report: March 2024
All three major indices notch all-time highs in February with the Nasdaq and S&P 500 scoring their best month since 2021. How long can the powerful upward move continue?
Watch the Market Action Report now:
Market Action Report
March 2024
INTRO TAG
All three major indices notch all-time highs in February with the Nasdaq and S&P 500 scoring their best month since 2021. How long can the powerful upward move continue?
That action starts now!
INDEX PERFORMANCE RECAP
Stocks ripped higher again in February on the backs of a handful of mega-cap tech stocks. For the month of February, the S&P 500 advanced 5.2%, the Dow Jones Industrials finished 2.1% higher and the Nasdaq Composite also gained a whopping 6.1%.
EQUITY UPDATE
Once again, stocks continue to rally on strong economic data, earnings beats and some powerful mega-cap stocks. This month alone, Nvidia was up 30%, Meta was up 26% and Amazon was up 13%. Investors continue to shrug off concerns over the highest interest rates in two decades.
BOND UPDATE
Bond yields all spiked higher for the month. The 5yr closed at 4.26%, the 10 yr at 4.25% and the 30 yr at 4.38% and 4.21% respectively. As of this writing, the 10-year yield is trying to break out but hasn’t yet. If it does, that will be a new headwind for stocks.
COMMODITY UPDATE
March WTI Crude rose steadily all month and closed out at $78.26/barrel. Concerns about future OPEC+ policy weighed on the oil market; however, the state of the term structure of the oil futures market continues to point to a tight physical market. On the charts, there has been a clear loss of momentum but the upside target of $82-$83/barrel based on the magnitude of the recent pullback in prices remains in focus. As far as downside risks go, easing geopolitical tensions in the Middle East and Eastern Europe could both instantly remove several dollars’ worth of risk premium from global oil futures benchmarks.
March High Grade Copper initially dipped lower before reversing course to close slightly lower for the month at $3.90/oz. $3.95 is still the key level to beat for copper and economic bulls.
Much like Copper, Gold also fell at the beginning of the month before reversing course. It too closed slightly lower at $2045.70/oz. The outlook for gold remains positive but the market is, for now, still trendless in the mid $2,000s.
CURRENCY UPDATE
The dollar spiked higher right out of the gate and then stabilized for the remainder of the month to close out at $104.09. Until the data or central bank speak changes expectations for the Fed, ECB or BOE, currency markets will remain calm. With the dollar in the mid-to-low 100s, it’s “neutral” for stocks. And while it’s not going to fuel a continued rally, it’s not going to weigh on earnings, either.
ECONOMIC UPDATE
The Jan Core PCE Price Index rose 0.4% m/m and 2.8% y/y and met expectations. The most important part of Core PCE was the fact that inflation continued to decline year over year to 2.8% from 2.9%. That’s a minimal reduction but considering the bounce back in CPI, PPI and other inflation metrics, that was a mild relief and that’s why stocks rallied.
Bottom line, the “burden of proof” in this market still rests squarely with the bears and yesterday’s Core PCE Price Index wasn’t bad enough to cause a pullback. But beyond the short term, this is not something that will make the Fed more confident that inflation is moving quickly to 2%, and as such, it won’t pull forward rate cut expectations.
THE WRAP
The logic remains consistent. If the rally continues, it’ll likely also continue to broaden and benefit other sectors outside of tech. However, if something legitimately “bad” does happen, these strategies with some sort of hedge should relatively outperform the S&P 500 and be able to help investors keep more of these substantial gains.
CPK FOCUS
For the month of March, our models continue to hold a 50% allocation in the money market due to the current economic environment and the overbought position of the market itself.
Our broad focus remains on Domestic Equities and International Equities.
Our focus in Domestic Equities is on Large Cap Growth, Large Cap Blend and Mid Cap Blend with an emphasis on Technology, Industrial, Consumer Cyclical & Financials.
In International Equities, our focus is still on Europe Emerging, Latin America and Europe Developed.
CPK DISCLAIMER
As a reminder, my current allocation is not a recommendation. Regardless of what happens next, investors like you need to have a simple and yet solid financial plan that reduces RISKS, COSTS and TAXES while securing the necessary income you need to maintain your lifestyle throughout retirement.
If you don’t have a plan OR you’re not comfortable with the plan you currently have, call me today to get pointed in the right direction.
I’m Chad Kunc and that puts a wrap on the March 2024 Market Action Report. Thanks for joining me. It’s time for me to get back to the markets.
And that action starts, NOW!