First Quarter 2024 - Market Talk

Total Returns for Q1 2024: Dow +5.62%, S&P +10.16%, Nasdaq +9.11%, Russell 2000 +4.81%

Investors dialed back their expectations for rate cuts during the first quarter of 2024 and now expect the Federal Reserve to lower interest rates only three (as op­ posed to six) times this year.

Despite the firmer interest rate outlook, another quarter of year-over-year earnings growth and long-term monetary policy that is supportive of investor risk appetites allowed stocks to move higher in the period. Indeed, breadth returned to the market (finally) and the S&P 500 delivered healthy gains of +10.16%, outperforming the tech-heavy Nasdaq's return of +9.11%.

Inflation continues to cool, but investors are now contending with hotter valuations. Asset prices in most sectors of the economy have meaningfully appreciated since this time last year, and as this newsletter goes to print the S&P 500 trades for 21x next-twelve-month's earnings, which is historically considered expensive.

We remain encouraged by the economic backdrop and corporate sector fundamentals but are eager to remind investors that forward returns are a function of two things: fundamentals and valuation. Our approach to managing your assets continues to emphasize prudence and patience, and we are grateful for the trust you place in us as we help you navigate and plan your financial future.