The first quarter of 2024 was a record-breaker for markets, despite facing higher interest rates on Wall Street. After experiencing a regional banking crisis and geopolitical turmoil at the end of 2023, markets entered a powerful bull market with traders anticipating rate cuts from the Fed. However, hot economic data and warnings from Fed officials forced investors to adjust their expectations to align with the projected three cuts, likely starting in June or July. Despite intermittent sell-offs, the stock market continued to climb higher, with the S&P 500 index on track to increase by 10% for the first three months of the year.
The S&P 500 logged 21 record-high closes in 2024, with the Dow Jones Industrial Average and the Nasdaq Composite also reaching new highs. Tech stocks like Apple, Tesla, and Alphabet have seen mixed performance this quarter, with some shares falling while others have posted gains. In addition to tech stocks, small caps and alternative assets like gold and Bitcoin have also seen increases. Chief Investment Officer Leslie Thompson expects the rally to continue on strong corporate earnings, with earnings in the S&P 500 growing 4.3% in the fourth quarter of 2023 and projected to grow by over 10% for 2024.
Despite the positive market indicators, there are concerns that stocks may be overvalued compared to the performance of the economy. Investors are cautious and are closely monitoring for signs of inflation that could derail the Fed’s plans. However, there are currently no major risks on the horizon, according to Zachary Hill, head of portfolio management at Horizon Investments. Historically, new highs at the beginning of the year tend to predict positive annual returns, with the S&P 500 seeing an average 15.8% return in years with new highs in January and February.
In other news, Disney and Florida have settled their yearslong dispute, with the Central Florida Tourism Oversight District approving a settlement to end a legal fight. The conflict began in March 2022 when Disney’s CEO criticized a controversial bill in Florida, leading to heightened tensions between the entertainment giant and Governor Ron DeSantis. The war of words escalated, resulting in threats to revoke Disney’s special privileges and lawsuits. DeSantis expressed satisfaction with the settlement, stating that it was in the best interests of the state.
Following the collapse of the Francis Scott Key Bridge in Baltimore, a deadly incident that is unfortunately not the first major bridge collapse in the US, there are calls for action similar to the response to the Minneapolis bridge collapse in 2007. The collapse of the I-35W bridge in Minneapolis led to 13 deaths and significant economic impact, with concerns about traffic disruptions and economic losses. However, the response to the collapse was swift, with a new bridge built in 13 months and minimal economic impact. The adaptability and quick resolution of the Minneapolis bridge collapse could serve as a roadmap for Baltimore moving forward.
