THE WEEK IN REVIEW: March 24-30, 2024

Best quarter in five years for U.S. stocks

The first quarter of 2024 will go down as the best quarter for U.S. stocks since 2019. When the smoke cleared, the S&P 500 was up over 10%, the Nasdaq gained 9% and the Dow was up over 5% for the quarter. That’s pretty good for three months; the last time we saw a quarter like this one was 2019, which turned out to be a really good year for stocks. Hopefully, that’s what we have in store for the final three quarters of 2024.

Not everything was smooth in the first quarter. Rate cut expectations were changed, there were concerns earnings would be crushed, inflation was stubbornly stalled and consumers were exhausted. Still, markets persevered, and — despite the many reasons for throwing in the towel or sitting on the sidelines — those whose plans included U.S. equities were rewarded. The risk and angst were there, but so was the reward. You bought the ticket and took the ride, and now you have some cushion and can reallocate back to targets and keep your plan on track.

If you weren’t involved in the markets, perhaps you can find some soft spots in the coming months and average yourself back in a responsible manner. But if you have been staying in close contact with your advisor and staying disciplined, this quarter should not have been a surprise. As always, there will be unexpected news to react to, but we should all know that by now. The only constant is change, but having a plan and sticking with it gives us the confidence and comfort that we have at least some measure of control.

That doesn’t mean we never change and just sit by and watch the world spin away from us. Instead, what we do is constantly ask: Are we on track? What adjustments can we make to stay on track? Small tweaks add up after a while and make a big difference over time. The key is to stay informed, aware and realistic — and stay in touch with your advisor to make sure you are properly allocated.

Sam is not the man!

Sam Bankman-Fried (SBF) was sentenced to 25 years of jail time for defrauding investors in FTX. He tapped investors in his crypto exchange and used other people’s money to fund a lavish lifestyle, give gifts to friends and family, and donate to politicians. He faced a maximum of 110 years in jail, and prosecutors wanted him to do 40 to 50 years. The defense agitated for 6.5 years, arguing bizarrely that SBF’s “special dietary needs” would not be met in prison and that he “would not thrive” behind bars.

The judge finally had enough and sentenced SBF to 25 years after his conviction by a jury of his peers last year. He will have some time to consider his actions and will not be free for at least 15 years, after which he may be paroled but isn’t allowed to run any financial business ever again.

The economy is still chugging along — but for how long?

The final reading of fourth-quarter gross domestic product (GDP) was revised from 3.2% to 3.4% last week, which is pretty strong despite higher interest rates. Inflation remains elevated and appears to have leveled off, while Friday’s personal consumption expenditures (PCE) numbers were in line with expectations. We spent more, but wages declined, so people are spending more and getting less with less money. It’s not a great sign for the economy in the near term and doesn’t bode well for the Federal Reserve to ease up on rates anytime soon.

The employment number for March will be released this week and is expected to show around 200,000 jobs created last month. A significant upward surprise will not be welcomed. Finally, the fallout from the shipwreck that collapsed the Francis Scott Key Bridge and closed all shipping into and out of the Port of Baltimore bears watching as we head into the new quarter.

Coming this week

We’ll see a delayed response to the latest PCE numbers early in the week since markets were closed on Good Friday when the data was released.
Fed officials are making the rounds this week, with speakers lined up every day but Monday.
Data this week includes factory orders, job openings data for February and U.S. auto sales (Tuesday); the ADP employment report and MBA mortgage applications (Wednesday); and unemployment claims and the U.S. trade balance (Thursday).
The Bureau of Labor Statistics’ employment situation (non-farms payroll) will be released on Friday. The last reading was a surprising +275,000, and the consensus is calling for 200,000.