Despite the shortened trading week, the Dow Jones Industrial Average and the S&P 500 Index ended both the week and the quarter with gains. The S&P 500 Index recorded a new high, ending the week at 5,254.35.1 The market’s advance was notably broad, with the S&P 500 Equal Weight Index gaining 1.64% for the week, while the market-weighted S&P only increased 0.39% over the same period.2 Small-caps (Russell 2000, 2.54%) also outperformed large-caps (Russell 1000, 0.47%) during the week,3 while value outpaced growth with the Russell 1000 Value Index gaining 1.79% versus the 0.60% decline for the Russell 1000 Growth Index.4
Last week's economic releases in the United States provided a nuanced picture of consumer sentiment and inflationary pressures. Consumer indicators — crucial for gauging economic health — delivered a mixed performance. The Conference Board Consumer Confidence Index revealed a slight decline in March, contrary to consensus expectations for an uptick.5 This unexpected dip suggested potential concerns among consumers despite ongoing economic recovery efforts. However, later in the week, the University of Michigan's consumer sentiment reading painted a more optimistic picture. The index was revised upward to its highest level since July 2021, driven in part by diminishing inflation fears.6
Meanwhile, inflationary concerns were in focus with the release of personal consumption expenditures (PCE) inflation data by the Commerce Department. The PCE Index, a key measure of inflation closely monitored by policymakers at the Federal Reserve (Fed), indicated a 2.5% year-over-year increase in overall consumer prices, marking a notable rise from the 2.4% reported in January.7 The acceleration in inflation, albeit moderate, underscores the ongoing challenges posed by rising prices for consumers and policymakers alike. While moderate inflation can be indicative of a strengthening economy, excessive inflationary pressures can erode purchasing power and potentially necessitate policy interventions to maintain price stability.
Looking ahead to this week, the focus will be on March non-farm payrolls report and Institute for Supply Management (ISM) Manufacturing Index (PMI). Job creation, as measured by non-farm payrolls, is expected to increase by around 200,000 in March (down from 275,000 in February), with a forecasted decline in the unemployment rate to 3.8% (from 3.9% in February).8 The ISM Manufacturing Index — which measures the change in production levels across the U.S. economy from month to month — is expected to improve, along with several other economic indicators from February. Lastly, several Fed officials are scheduled to give speeches, including Fed Chairman Jerome Powell, who will speak at Stanford's Business, Government and Society Forum. These speeches may provide useful insights into the Fed's stance on monetary policy and its view of the economic outlook.
Note:
The ISM Manufacturing Index, published by the Institute of Supply Management, shows whether manufacturing and the economy as a whole are expanding or contracting.
Sources:
1CNBC – S&P 500 closes at a fresh record, posts strongest first-quarter performance since 2019; 3/28/24
2,4T.Rowe Price; Global Markets Weekly Update; 3/28/24
3MarketWatch; 3/28/24
5The Conference Board – Consumer Confidence Index; 3/26/24
6Reuters – US consumer sentiment tops estimates in March to hit nearly 3-yr high, UMich says; 3/28/24
7USA Today – PCE inflation report: Key measure ticks higher for first time since September; 3/29/24
8MarketWatch – U.S. Economic Calendar; as of 4/1/24
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