2024 Q1 Market Review

By Ken McMurray on April 26, 2024

Global stocks had a strong start to the year.  Continued interest in the potential of Artificial Intelligence led to gains in the Information Technology sector, particularly in the United States market.  Optimism in the market was supported by the prospect of falling inflation giving room for central banks to cut policy rates in 2024.  Expectations for interest rate cuts outweighed uncertainty surrounding upcoming US elections and geopolitical tensions. With hindsight, realized inflation surpassed the expectations of the quarter, unfortunately.

The aggregate global stock market, as measured by the MSCI All Country World Index of global stocks, rose 8.32% in the first quarter and ended the trailing 12-month period with gains of 23.75%. 

In the US markets, the S&P 500 Index of large company stocks increased 10.56% for the quarter and 29.81% over the past 12 months.  Small companies in the United States as measured by the Russell 2000 Index, gained 5.18% during the quarter and rose 19.66% over the trailing 12-month period. The Dow Jones US Select Real Estate Investment Trust Index, a benchmark for US real estate performance, ended the quarter down 0.39%, but gained 10.43% over the previous 12 months.

Stocks in international developed countries, as proxied by the MSCI Europe, Australasia and Far East Index, gained 5.93% for the quarter, and 15.87% for the trailing 12 months.

Stocks in emerging market countries, as measured by the MSCI Emerging Markets Stock Index, rose 2.44% for the quarter, and 8.57% over the previous 12 months. 

Global and U.S. fixed income prices declined in the first quarter of 2024 with changing expectations about the pace and magnitude of interest rate cuts.  U.S. bonds, as measured by the Bloomberg U.S. Aggregate Bond Index, declined 0.78% for the quarter, but rose 1.69% for the trailing 12-month period.

The global bond market, as measured by the World Government Bond Index, declined 2.42% in the first quarter and 0.84% in the trailing 12-month period.  Intermediate-term corporate bonds in the US, as proxied by the US Corporate Bond Index, rose 0.26% in the first quarter, and 4.93% over the last 12 months.

The yield on the 10-year Treasury note rose to 4.2% at the end of the first quarter, from 3.88% at the end of 2023.  Strong U.S. economic data and greater uncertainty around the sustainability and pace at which inflation may decline contributed to the increase in the yield of 10-year Treasury note.   This led to changing expectations about the timing and magnitude of potential Federal Reserve policy rate cuts in 2024.

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