Q1 - April 2024
Equities continued their “march” higher through March with the S&P 500 Index hitting a high on the 28th at 5,254. As of this writing in mid-April, things have cooled a bit, as the drivers behind the market strength have evolved. Artificial Intelligence was the reason for much of the market’s strength in 2023, despite the short list of clear (and investible) beneficiaries. A new technology and a mixed economy led investors to devote significant dollars to the biggest cap technology stocks. In early November of last year, the average stock in the S&P 500 and the small cap indices were both in negative territory while the S&P 500 Index was up double digits¹. A much broader and longer list of stocks came to life late in November due to a shift in tone from the Fed who began to imply that interest rate cuts were on their minds. Housing stocks, bitcoin, most things on the more speculative side and the most interest rate sensitive companies ripped higher in anticipation of the easier conditions as the “inflation was beat” thesis was quickly discounted. Those same groups plus the AI plays continued to lead in Q1. Despite that strength, the underlying catalysts have both shifted or faded a bit. A later start date on the Fed cuts, and less buzz about AI have evolved as we entered Q2. In January, the Fed was expected to lower rates by 7 quarter-point cuts during 2024. The market’s expectation today (April 12th) is for 2 cuts. So, as usual, the macro narrative evolves or shifts, sometimes it makes complete sense and we see it coming, but many times we do not, or we simply disagree. We missed the AI craze (congrats to any Nvidia or Microsoft shareholders out there), and we were skeptical about the soft landing thesis and rate cut optimism, but we are feeling a bit more vindicated today given the very recent turnover in market leadership. We shall see!
Tyler Pullen, CFA
Portfolio Manager
Past performance does not guarantee future results. Market conditions can vary widely over time and can result in a loss of portfolio value. In accordance with the rules of the Securities and Exchange Commission, we notify you that a copy of our ADV, Part 2A and 3 filings with the SEC is available to you upon request. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list