Marquette - 1Q2024 Market Update

The first quarter of 2024 is in the books! Here are a few things we’re watching in the markets.

Market Leadership and a Broadening Rally in Stocks

The S&P 500 had its best first quarter since 2019, increasing by 10.16%. While the Nasdaq 100 rose by 8.49%, and the Dow Jones Industrial Average saw a rise of 5.62%. Strength came from Artificial Intelligence themed companies, yet we saw the market rally broadening into other sectors during the quarter. 

 Federal Reserve Summary & Outlook

While the Fed left rates unchanged at the most recent March meeting, the Fed did let us know that three 25-basis-point cuts are expected by the Federal Open Market Committee in 2024. 

When interest rates are lowered, the returns on cash investments such as savings accounts, money market funds, or certificates of deposit decrease. This means that by keeping a significant amount of cash, you may be missing out on potential higher returns that could be earned through other fixed income investment opportunities.

Many investors have been holding money market vehicles, as the short end of the yield curve has offered attractive yields (currently 5.25%). As the Fed begins to cut rates, the yield on these money funds will decrease. For those of you who have been holding Money Market Funds at Schwab, we may want to discuss potential repositioning in the coming months depending on your circumstance.  

Here is what could happen to total returns of cash, short-term bonds, and intermediate-term bonds at the end of 12 months if rates fall by 1%.

Election Year Insights 

In our last market note, we mentioned that It is difficult to identify any systematic return patterns in election years. On average, market returns have been positive both in election years and the subsequent year. That said, it is interesting that the 3rd quarter of election years tend to be the best. This of course, is not predictive, but it is an interesting data point.

Please reach out if you have any questions, would like to schedule an investment review, or if anything has materially changed in your personal financial situation.

Abbey M. Spoo, CFP®, Chief Investment Officer