Investment Conditions and Outlook
April 9, 2024
April 2024 Investment Conditions & Outlook Executive Summary Spring has sprung with the U.S. stock market not missing a beat from where we ended last year. Optimism over the economy and interest rate cuts combined with the exuberance around opportunities in artificial intelligence resulted in indexes hitting new all-time highs. The stock market continues to be propelled by some of the megacap companies that carried the markets in 2023. The “Magnificent Seven” posted huge gains in 2023, but this year we have seen them go their separate ways (see chart of the quarter) with broader equity market participation. This year’s performance has reaffirmed early signs investors are beginning to rotate portfolios to look for opportunities outside of big tech and in anticipation of lower rates later this year. Much of the market euphoria is in anticipation of the Fed turning dovish and cutting interest rates. The Fed’s dilemma is that delaying rate cuts and easing too slowly could result in a recession, while easing too quickly could trigger a rebound in inflation. We believe the Fed will stay the course until later this year before we see any rate cuts. Our main concern is the Fed’s caution regarding stagflation (as […]