In Markets "In a Nutshell"

Markets “In a Nutshell” for March 4, 2024

Investment Week at a Glance

Stocks finished mixed for the week.  The Dow Jones Industrial Average fell 0.1%, the S&P 500 was up 0.90%, and the NASDAQ rose 1.70%. Foreign stocks (MSCI EAFE) were down, falling 0.10%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 4.18%.  (Data source: Wall Street Journal)

February Finishes Strong

February was another solid month for markets as the S&P 500 gained 5%, making it the 5th strongest February gain since 1980. Not only did the domestic market have a strong month, but foreign markets also hit an all-time high. One of which was Japan’s Nikkei, which hit its first new high since 1989, over 34 years ago. Another positive throughout the month for equities was that rates moved higher throughout the month but did not slow down stocks on their way higher. Throughout last year when we saw yields rise, equities would typically fall during those periods. The main reason this may have not happened was the strong 4th quarter earnings reports we have seen so far. Another reason could be strong economic growth which has continued to support the market.

Could Bond Performance Turn Around?

Bonds have struggled as rates have risen rapidly over the past couple of years as the Fed started its rate hike cycle. Bonds have not shared in the gains that equities have seen in the past 18 months, but history says that might change. Looking back at the Fed’s last 7 major rate tightening cycles, in the 12 months before the last Fed rate hike, bonds increased an average of 1.7%. In the 12 months after the last Fed rate hike, the average gain has been 13.1%. So far since the last rate hike, which was 8 months ago, bonds have only been up 1.4%. This would suggest that bonds could have some room to run in the near future as even the worst return of the 7 occurrences was still an increase of 6.8%. If inflation begins to tick up it could be bad news for bonds but if it doesn’t and the Fed starts cutting rates, bonds could see a nice boost.



What is the current price per barrel of oil? (Scroll Down for Answer)

  1.     $75
  2.     $80
  3.     $85
  4.     $90

















Answer below.



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2.    $80.  The price of oil has been up over 11% already for the first two months of the year. It will be something to keep an eye on as higher oil costs typically can cause CPI to increase as an increase in gas price can seep into other sectors of the market.