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Monthly Market and Economic Update | March 2024

April 11, 2024

Monthly Market and Economic Update | March 2024


  • In March, the S&P 500 Index was up 3.22%, while the Bloomberg Barclays US Aggregate Bond Index was up 0.92% and the Bloomberg Barclays Municipal Bond Index had no change.
  • The stock market experienced the best first quarter return since 2019. A strong start to an election year shows that, at least at this stage, the market is not significantly concerned about the potential outcome. The market is more focused on the developments in AI and the direction of interest rates. 
  • The futures market is now pricing the first Federal Reserve rate reduction for mid-year, likely July. The Fed continues to be consistent in their messaging that they will hold rates higher for longer until the signs that inflation is well under control become more evident.


  • Following the March meeting of the Federal Reserve Open Market Committee, they released their projections for interest rates and GDP growth for 2024 and beyond. The Fed continues to be focused on inflation and is cautiously optimistic that inflation is easing and will allow the Fed to lower the Fed Funds rate by a quarter point three times before the end of the year. The Futures market is currently forecasting quarter point rate reductions in July, September, and December. The Fed and private economists are also forecasting GDP growth just above 2% for 2024 and the same for 2025 and 2026. Absent a significant and unforeseen economic calamity, the economy seems to have weathered higher inflation and rising interest rates and remained airborne – as in “no landing” rather than the hard landing that was feared.
  • For bond investors, the combination of higher current interest rates and potentially rising values due to the possibility of falling yields may result in a rather ordinary but potentially positive year for bonds. Given the volatility in bond values over the past few years, ordinary is likely welcome. The probability of a soft landing for the economy is increasing. 2024 started with strong results for the key indicators for economic growth – jobs growth, consumer spending, and industrial production. Despite numerous recession forecasts in 2022, 2023, and now going into 2024, the actual economy continues to grow. 


  • The stock market enjoyed the best first quarter since 2019. This strong start to 2024 contradicts concerns some have regarding the impact the election may have on the markets and the economy. History has shown that the primary season is generally when the most volatility has occurred during the election cycle. However, this year, the candidates for the two major parties were decided very quickly. Given that the two candidates are, or have been, president, the foreign and domestic policies for both candidates are well known. Obviously both candidates have significantly different domestic and foreign policies. However, given the strength of the market, investors have demonstrated that, regardless of the election outcome, the economy and earnings growth are of primary importance. Collectively, investors have likely already made decisions on which companies and industries are likely to winners and losers under each administration. And, so far, have indicated that the economy will likely continue to grow regardless of which candidate prevails.
  • It should be noted that the S&P 500 Index is currently overvalued relative to historical averages and may be ripe for a short-term correction. However, the broader market is generally undervalued, so any correction is likely to be contained. Markets have corrections during most years, usually in the order of a decline up to 10% from highs. Of course, accurately predicting the direction of the markets in the short run is not possible. Investors should focus on the longer-term path of the stock market and the economy and take advantage of any short-term correction by rebalancing to their appropriate risk profile.
  • The US economy has transitioned from the rapid recovery phase to a slower growth phase between 2020 and 2023. With the Federal Reserve prescribing strong medicine in the form of higher interest rates, certain market sectors and the overall economy have endured some short-term side effects. Now that the Federal Reserve is projecting a pivot to lower interest rates in 2024, the markets are behaving as if we are in an economic recovery which should mean leadership broaden out toward stocks that have been overlooked and undervalued. Those opportunities can be found in both US and international stocks. 


  • The allocation for each investor should be diversified between growth and safety based on their own tolerance for risk in the short run and their desire for growth in their investments in the long run. Determining the appropriate asset allocation and risk-reward trade-off is the most important decision for investors.  Once determined, staying invested during periods of uncertainty and rebalancing back to the selected risk profile can help investors achieve their long-term goals.