Stocks powered ahead in the first quarter of 2024. For large company US stocks, it was the best quarterly performance since 2019, with the S&P 500 Index registering twenty two “all time high closes” during the three-month period as trading wrapped up on March 28.
Many market forecasters were constructive heading into the start of the year, but few prognosticators predicted the continuation of the powerful rally that began in late October 2023. A resilient economy, confident consumers, and excitement about artificial intelligence were reasons cited for the run-up in stock prices.
For the quarter, large company US stocks returned 10.4%. Small company stocks also rose, but the pace of increase was a slower 5%. Stocks of foreign companies returned 6%.
Bonds, however, finished in the red. Interest rates rose as inflation data disappointed. The Bloomberg US Aggregate Bond Index, the benchmark for high-quality bonds, declined by 0.7% during the quarter.
Here’s snapshot of stock and bond returns for the last five quarters:
US Stocks = S&P 500 Index; US Bonds = Bloomberg US Aggregate Bond Index
Midway through April, stock markets were showing some signs of fatigue after running up so much in Q1.
As of April 19, the S&P 500 Index of large company US stocks had declined by 5% from the end of March, and the technology-heavy Nasdaq Index had fallen by nearly 7%.
Longer-term bond yields increased by about 0.4 percentage points, a sizable three-week move, which also translated to about a 5% price decline for high-quality bonds maturing beyond ten years.
-RK