Best Q1 Since 2019

March 28, 2024

March is traditionally an “average” month for the market.  Over the last 50 years the mean increase for the month has been .6% and we have closed higher about 60% of the time.  However, coming into March the S&P 500 had advanced for 4 consecutive months and was nearly 7% higher for the year, so a retracement of a portion of the advance would not have been a surprise.  What we saw instead was more of what we have been experiencing since the October low, increasing excitement about the profit potential of artificial intelligence and a growing belief interest rates have peaked.  We received the last of the quarterly earnings reports and they were, on average, better than had been expected.  During the month we saw multiple new all-time highs for all the major indices and at the end of the month the S&P 500 had gained another 3.1% and ended Q1 with a gain of 10.2%, the best first quarter for the market since 2019.  Interest rates, as measured by the 10-year Treasury, edged lower during March, oil prices moved 6% higher and gold was up 8%, with the precious metal hitting a new all-time high during the month.

The month began on a Friday with the S&P 500 hitting a new all-time high.  The first full week started with some rare profit taking as interest rates moved higher and the S&P 500 moved lower.  Strong earnings reports from major tech stocks reversed that trend mid-week, but a stronger than expected jobs report at the end of the week created some selling.  At the end of the first full week of trading the S&P 500 was up .5% for the month.  We began the second full week with the rest of the country on daylight savings time and rising oil prices weighing on the market.  During the week we learned both CPI and PPI were higher than expected in March, but analysts blamed the jump on oil prices and the S&P 500 ended the week little changed. The third week was not only a strong week for the market averages, but the best week this year for the S&P 500.  During the week, the Federal Reserve Open Market committee decided to leave interest rates unchanged, signaled as many as 3 rate cuts this year and the market responded by rallying to more new all-time highs.  The week closed with the S&P 500 up 2.3%.  Trading during the final week of the month was shortened by the traditional close of the market on Good Friday but the S&P 500 managed to climb to yet another new all-time high.

April is typically one of the strongest months of the year for the market as last-minute cash comes into retirement accounts before the cutoff.  There is no reason to believe artificial intelligence excitement will wane and we believe the next Fed move on interest rates will be lower.  Rising oil prices and/or interest rates would be problematic and stock valuations are now well above historic norms.  A case can be made for elevated stock valuations, but prices are predicting a continuation of the current trend with no disruptions.  The “Goldilocks” scenario can go on for an extended time, but it is based on the bears not coming home!  The biggest risk to the market is something we can’t see, a black swan event that makes headlines and changes the scenario.  Absent such an event it is hard to picture the market moving significantly lower in the short term.

If you know someone who would be interested in learning more about Greenberg Financial Group, please contact us at 520-544-4909, or visit our website at www.greenbergfinancial.com. As always, the key to successful investing is to have a portfolio that is consistent with your investment objectives and risk tolerance. We invite you to listen to our weekly Money Matters radio show which airs every Sunday Morning from 8:00 AM to 10:00 AM on KNST AM 790.  You can also listen to us on iHeart radio, follow us on Twitter @gbergfinancial or on Facebook under Greenberg Financial Group.  Previous radio shows are available by going to www.iheart.com or using the iHeart app and typing Money Matters with Dean Greenberg.