Stocks bounced back, extending a rally that’s already topped $4 trillion this year on hopes Federal Reserve’s rate cuts will keep fueling profits at Corporate America.
The equity market rebounded after a two-day pullback, with the S&P 500’s advance for 2024 approaching 10%. The US benchmark measure has only seen double-digit gains for two quarters in a row in five instances since 1950, according to data compiled by Bloomberg.
“Stocks have moved higher in the first quarter in anticipation of the first-rate cuts,” said Anthony Saglimbene at Ameriprise. “We have likely already entered a period where the Federal Reserve is now less likely to surprise the market from here on out.”
As traders geared up for the Fed’s preferred inflation gauge on Friday — when markets will be closed — they parsed the latest economic readings. US consumer confidence held steady, durable goods orders climbed while home-price growth accelerated at the fastest rate since 2022.
The S&P 500 rose to around 5,230. Tesla Inc. (NASDAQ: TSLA) led gains in megacaps, while Apple Inc. (NASDAQ: AAPL) underperformed as its iPhone shipments in China sank. Former president Donald Trump’s startup Trump Media & Technology Group Corp. soared after completing a merger with Digital World Acquisition Corp.
Treasury 10-year yields advanced one basis point to 4.26% ahead of a $67 billion sale of five-year notes. The dollar wavered.
The S&P 500 is on track to notch five straight months of gains from November through March — a feat only accomplished one other time this century in 2013.
That set-up has historically underpinned a secular bull run in US stocks that extended at least a year, according to Jeffrey Hirsch, editor of the Stock Trader’s Almanac. Since 1950, when the equities benchmark posted a consecutive monthly advance from November to March, the S&P 500 rose the remaining nine months of the year in all 11 instances, with an average gain of 12%, he added.
“I continue to see the US stock market as being attractive, technically speaking, and do not feel the sufficient risk is there to warrant a selloff at this time,” said Mark Newton at Fundstrat Global Advisors. “Overall, it’s likely that prices turn back higher and push up into late March given no evidence of technical deterioration.”
Newton says a rally in the S&P 500 to 5,350-5,400 is definitely possible into mid-April — before a consolidation gets underway.
For stocks to warrant their multiple expansion in recent months, global central banks must ease monetary policy this year and companies have to deliver healthy earnings growth, according to JPMorgan Chase & Co.’s Marko Kolanovic.
“Overall, if central banks turn out to be more dovish than currently projected, but without this being accompanied by growth disappointments, present equity multiples could be defended,” he wrote this week. If earnings disappoint and central banks are more restrictive, equity multiples would need to fall, he added.
Bank of America Corp.’s institutional, retail, and hedge fund clients were all net sellers of US equities in the week ended March 22, while corporations purchasing their own shares were the sole net buyers.
As the big debate unfolds on how concentrated or broad this year’s S&P 500 rally has been, there’s data to support both arguments.
After the year kicked off with gains focused on tech-heavy sectors, the rally has broadened out to other groups like commodities and industrials. However, looking at the contribution to total returns, 60% of gains in the gauge have been driven by just six stocks: Nvidia Corp. (NASDAQ: NVDA), Microsoft Corp. (NASDAQ: MSFT), Meta Platforms Inc. (NASDAQ: MVRS), Amazon.com Inc. (NASDAQ: AMZN), Eli Lilly & Co. and Broadcom Inc
Source: https://finance.yahoo.com/news/asia-traders-cautious-wall-street-223827874.html
