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Stocks soared at the start of the year: 22 record highs in three months

It’s been a hot start to the year for the stock market.

this S&P 500 IndexAs one of the world’s most watched stock indexes, it rose more than 10% in the first three months of 2024 and hit 22 all-time highs.

About 40% of stocks in the index are trading above levels 12 months ago. Even when the index falls, it’s not by much, with the S&P 500 having only fallen three days so far in 2024. As of the close, the decline was more than 1%.

The move was driven by renewed interest in the stock. Investors poured about $50 billion into funds that buy U.S. stocks in March, according to EPFR Global.

A modest rebound in January has given way to broader optimism that the Fed can lower inflation to its 2% target without too much of a hit to the economy, based on expectations that the Fed will begin cutting interest rates this year. damage. The long-awaited “soft landing.”

A new look at inflation and spending Published on Friday It was in line with economists’ expectations and reinforced consensus forecasts for changes in interest rates from the Federal Reserve. “We don’t need to rush to cut interest rates,” said Federal Reserve Chairman Jerome H. Powell. said at Friday’s event.

In markets, the boom has spread to riskier areas of the financial system. Bitcoin It continues to trade above $70,000, the first time it has hit that threshold this month after regulators made it easier for ordinary investors to buy funds that track cryptocurrency prices. Reddit and Trump Media The stock price rose sharply on the first day of listing. In the credit market, investors are financing companies through bonds and loans, and demand for borrowing and willingness to lend are expanding, a sign of optimism about corporate prospects.

even with Fed considers cutting interest rates That’s tripled this year, for a total of up to three-quarters of a percentage point, providing investors with returns that are still much higher than elsewhere around the world, helping to keep money flowing into the United States.

“I see this all over the world,” said Andrew Brenner, head of international fixed income at National Alliance Securities.

But Mr. Brenner also sees reason to be cautious. Cracks are showing in the economy and consumer finances are beginning to decline.Credit card debt has been rising, and the number of people delinquent on their car loans has surged Fastest pace in more than a decade. Some companies are also starting to struggle, with the number of companies defaulting on their debts more than doubling last year, according to S&P Global.

The Russell 2000 index of smaller companies, a measure of companies more vulnerable to the ebbs and flows of the domestic economy, also rose in the first three months of the year, but only by 4.3%. It’s a reminder that the biggest companies are driving stocks higher — especially those surfing the wave of artificial intelligence optimism.

“Stocks are working for people right now,” Mr. Brenner said. “I just wonder how long it will be before we get into trouble.”

So-called Hao Qi A group of stocks that drove the market higher last year continues to have an outsized impact, accounting for nearly 40% of the S&P 500’s gains in the first three months, according to data from S&P Howard Silverblatt.

However, Apple and Tesla’s steep declines mean a smaller group of companies — Nvidia, Meta, Amazon, and Microsoft—taking the market to new heights. They themselves accounted for half of the index’s gains.

“Incomes are good, interest rates are off their peak, employment remains high and consumers are willing to spend their paychecks. So the market continues to rise,” Silverblatt said.

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