Mid-Week Market Minute 4.3.24

Stocks Lower Mid-Week; Non-farm Payrolls Report on Friday

It’s been a tough start to the second quarter after U.S. stocks posted their strongest first-quarter start since 2019. Still, the past several months in the markets have been defined by tremendous optimism, as the S&P 500 achieved 22 new all-time highs in the first three months of this year, tacking on more than 10% in total return for investors. Knowing nothing else, one could argue a modest pullback could be both expected and embraced by investors.

At the halfway point this week, the S&P 500 is lower by a little more than 1% while the Russell 2000 was lower by more than 2.5%. Among other things, higher interest rates seem to be at the root of this week’s pullback. Sticky inflation data last Friday, paired with hawkish comments from Atlanta Fed President Raphael Bostic on Wednesday, helped push interest rates higher. After starting the week around 4.20%, the yield on the 10-year Treasury note traded as high as 4.42%. 

Looking ahead, the rest of this week brings several speaking engagements from Fed officials, most notably Fed Chair Jerome Powell on Wednesday afternoon. Separately, the markets will pay close attention to the non-farm payrolls report on Friday, where the U.S. economy is expected to post another strong month of job gains to the tune of about 215,000 added jobs in March.

With stocks in the U.S. and abroad still trading near all-time highs, we remind investors this is nothing out of the ordinary during a bull market, where markets tend to spend a significant amount of time near record highs. There’s always the risk for a significant sell-off or correction in the markets, but for long-term investors, history suggests investing at all-time highs has generally been quite fruitful, despite what our intuition might lead us to believe.

Source: GSAM, CNBC, JPMorgan

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