Equities again made new highs last week, but the leadership was different.
Tech stocks took a back seat to other sectors, such as Healthcare and Energy. Large caps also stepped aside as Small caps and Mid-caps led the market higher. The market continues to price in a June rate cut by the Fed, but Chairman Powell's comments on Good Friday indicated a "balanced" approach by the Fed. Powell stated the Fed did no "overreact" to last year's data and would seek not to overreact to the first few months of data so far in 2024. Meanwhile, the Fed's favorite measure of inflation, the PCE Price Index, was lower than expected on a month-over-month basis and flat year-over-year.
The U.S. consumer is alive and well according to Personal Spending data released on Good Friday.
Spending increased 0.8% last month, which was higher than expected and 4 times higher than the previous month. The death of the consumer appears vastly over-stated as consumer foreclosures and bankruptcies, while just slightly higher, are no where near the levels of the 1st quarter of 2007. Housing data continues to improve as Pending Home Sales recovered nicely in February and the weakness seems to have bottomed. The emergence of other sectors and asset classes within equities moving higher continues to point to a broadening of the market. Nearly three-fourths of S&P 500 stocks are within 10% of their 52-week highs. More than half the index is within 5% of their respective 52-week highs. As long as leadership continues to rotate within equities, markets may remain higher for longer.
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