Markets ended an outstanding first quarter on a quiet note ahead of the long holiday weekend. Despite wavering throughout the day, stocks closed with modest gains as investors digested the latest economic news and looked ahead to the release of key inflation data.
The speech given by Fed Governor Christopher Waller the night before seemed to have a hawkish impact on the markets, as he emphasized that there is “no rush” to cut interest rates. This sentiment may have contributed to the cautious trading seen on Thursday.
With the stock and bond markets closed for Good Friday, investors will have to wait until next week to react to the release of the Personal Consumption Expenditures Price Index (PCE), which is closely watched by the Federal Reserve as an inflation gauge.
Despite the uncertainty surrounding interest rates, the first quarter of the year has been remarkable for the markets. Exuberance over artificial intelligence (AI) stocks and expectations for interest rate cuts have fueled a strong rally in stocks, with all three main U.S. benchmarks posting solid gains.
The S&P 500 had its best first quarter in five years, gaining over 10% on a price basis. The Nasdaq Composite and the Dow Jones Industrial Average also saw significant increases, with gains of more than 9% and almost 6% respectively.
Economic news also provided some positive signals, with the U.S. economy growing at a faster pace than previously estimated in the fourth quarter. Additionally, initial unemployment claims remained steady, pointing to a healthy labor market.
General Electric (GE) was one of the S&P 500’s biggest losers on Thursday, as the company prepares for the spinoff of GE Vernova. Despite the recent struggles, analysts remain optimistic about GE’s prospects, with a consensus recommendation of Buy.
Overall, the outlook for the second quarter remains positive, with many strategists believing that the market still has room to grow. Investors will be eagerly awaiting the reopening of the markets next week to see how they react to the latest developments.
