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Market Dashboard

New every Monday with last week’s recap and notes on the week ahead.

Last update: 4/15/2024

US equities: Stocks have struggled in the second quarter (Q2) of 2024.

  • The S&P 500 Index was lower for a second straight week, closing down 1.56%. Technology and Communication Services were the best performing S&P 500 sectors last week, while Materials and Financials performed worst.
  • The Nasdaq Composite Index was down 0.45%, its third consecutive weekly decline.
  • The small-cap Russell 2000 Index declined 2.92%.
  • Equity volatility picked up, with the CBOE Volatility Index (VIX) jumping to 18, its highest level in 2024.

Inflation: Consumer inflation remains sticky and topped expectations for March.

  • Both the headline consumer price index (CPI) and “core” CPI, which excludes food and energy prices, came in higher than economists expected, up 3.5% and 3.8% year-over-year for March, respectively.
  • Both inflation metrics remain firmly above the Federal Reserve’s 2% target.
  • “Super-core” inflation, which also strips out housing costs, accelerated to 4.8% year-over-year, rising for a fifth consecutive month.
  • The producer price index (PPI), a measure of inflation at the wholesale level, increased 2.1% year-over-year in March.
  • The April University of Michigan sentiment report showed consumer inflation expectations for the next year and the next 5-10 years rose to 3.1% and 3.0% year-over-year, respectively.
  • Inflation also appears to be weighing on small companies, with the National Federation of Independent Business (NFIB) Small Business Optimism Index dropping to 88.5 in March, its lowest level since late 2012.

US Treasuries: Hot inflation data pushed US government bond yields higher.

  • The 10-year Treasury yield increased 12 basis points to 4.52% last week.
  • The two-year Treasury yield rose 15 basis points to 4.90%.
  • After last Tuesday’s hot CPI report, the Fed Funds futures market was expecting less than two Fed rate cuts by the end of the year, while the market-implied chances of a first cut in June dropped to about 20% from roughly 60% only a week earlier.

Currency: The US dollar gained.

  • The US dollar index was up 1.6% last week, its best weekly performance since September 2022.

Monetary policy: Fed plans to slow the pace of balance-sheet runoff.

  • In March meeting minutes released last Wednesday, the Fed mentioned the potential tapering of its efforts to normalize its balance sheet, known as quantitative tightening (QT).
  • As part of QT, the Fed has been reducing its multitrillion-dollar bond holdings by allowing those assets to mature without buying new ones.
  • Fed officials said they favor reducing the current monthly pace of this “runoff” by roughly half, with an eye toward avoiding market disruptions.

Corporate earnings: Results were mixed for several big banks.

  • Earnings season for Q1 2024 began with several big banks reporting last Friday.
  • Investors were disappointed by a lack of guidance from the banks around potential gains in “net interest income”—the difference between what banks earn on loans and what they pay on deposits—even after markets began expecting higher-for-longer rates during Q1.
  • As of last Friday, only 6% of S&P 500 companies had reported Q1 2024 results. Earnings-per-share growth was pacing at 0.9% year-over-year, versus the 3.4% rate analysts were expecting at the end of Q1.

Global headlines: China’s exports drop, European Central Bank signals rate cuts.

  • China reported a bigger-than-expected 7.5% drop in exports in March from a year earlier, the largest decline since August 2023.
  • During the European Central Bank (ECB) meeting last Thursday, the ECB left rates unchanged but signaled that cuts are coming soon.
  • Reports of rising conflict in the Middle East renewed geopolitical concerns.

Cross-Asset Performance Table

Returns and prices of the most popular indices and assets as of 4/12/24

Cross Asset Performance table

1) Annualized 3-year % return. 2) Option Adjusted Spread (OAS): OAS is a measurement of the spread of a fixed income security rate and the risk-free rate of return, which is adjusted to take into account an embedded option. Equity risk premium is the excess return that an individual stock or the overall stock market provides over a risk-free rate. The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.


S&P 500 Sector Performance

Technology and Communication Services were the best performing S&P 500 sectors last week, while Materials and Financials performed worst

S&P Sector Performance chart

Russell US Equity Style Performance

Growth has significantly outperformed value

Russell US Equity Style Performance table

US Equity Valuation

S&P 500 Equity Risk Premium

Bonds continue to appear attractive relative to equities

S&P 500 Equity Risk premium chart

P/E Relative to Rest of World

The S&P 500 remains expensive relative to the rest of the world

P/E relative to the rest of the world chart

US Fixed Income Valuation

Last week, the 10-year Treasury yield increased 12 bps to 4.52% and the two-year Treasury yield increased 15 bps to 4.90%

US Fixed Income Valuation table

†Interest Rate Volatility as measured by ICE BofAML Option Volatility Estimate Index (MOVE); *Mortgage-backed securities (MBS) are debt obligations that represent claims to the cash flows from pools of mortgage loans, most commonly on residential property. Mortgage loans are purchased from banks, mortgage companies, and other originators and then assembled into pools by a governmental, quasi-governmental, or private entity; **Options Adjusted Spread (OAS): A measurement of the spread of a fixed income security rate and the risk-free rate of return, which is adjusted to take into account an embedded option


Latest Economic Data

March inflation data came in hotter-than-expected, with CPI rising 3.5% YoY and “super-core” inflation accelerating to 4.8%

Latest Economic Data table

Sources: Bloomberg, FactSet, Morgan Stanley Wealth Management Global Investment Committee

 

The Week Ahead

  • Empire State Manufacturing Survey at 8:30 AM ET
  • US Retail Sales at 8:30 AM ET
  • US Business Inventories at 10:00 AM ET
  • NAHB/Wells Fargo Housing Market Index at 10:00 AM ET
  • Charles Schwab Reports Earnings
  • Goldman Sachs Reports Earnings
  • US Building Permits at 8:30 AM ET
  • US Housing Starts at 8:30 AM ET
  • US Industrial Production at 9:15 AM ET
  • US Capacity Utilization at 9:15 AM ET
  • UnitedHealth Group Reports Earnings
  • Bank of America Reports Earnings
  • BNY Mellon Reports Earnings
  • Johnson & Johnson Reports Earnings
  • Morgan Stanley Reports Earnings
  • PNC Reports Earnings
  • Beige Book at 2:00 PM ET
  • Philadelphia Fed Survey at 8:30 AM ET
  • US Initial Jobless Claims at 8:30 AM ET
  • US Continuing Claims at 8:30 AM ET
  • Conf. Board US Leading Economic Index at 10:00 AM ET
  • US Existing Home Sales at 10:00 AM ET
  • Comerica Reports Earnings
  • Netflix Reports Earnings
  • PPG Industries Reports Earnings
  • Proctor & Gamble Reports Earnings
  • American Express Reports Earnings
  • Fifth Third Bancorp Reports Earnings

Cross-Asset Performance

S&P 500: A market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. It measures the movement of the largest issues. Standard and Poor's chooses the member companies for the 500 based on market size, liquidity and industry group representation. Included are the stocks of industrial, financial, utility, and transportation companies. Since mid-1989, this composition has been more flexible and the number of issues in each sector has varied. The returns presented for the S&P 500 are total returns, including the reinvestment of dividends each month.

Dow Jones Industrial Average: Computed by summing the prices of the stocks of 30 companies and then dividing that total by an adjusted value—one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities.

NASDAQ Composite: Measures the performance of all issues listed in the NASDAQ Stock Market, except for rights, warrants, units, and convertible debentures. Morningstar reports the NASDAQ Composite as a price return.

MSCI Europe IMI: This index captures large, mid and small cap representation across 16 Developed Markets countries in Europe. With 1,372 constituents, the index covers approximately 99% of the free float-adjusted market capitalization across the Developed Markets countries of Europe.

MSCI Japan IMI: This index is designed to measure the performance of the large, mid and small cap segments of the Japan market. With 1,134 constituents, the index covers approximately 99% of the free float-adjusted market capitalization in Japan.

MSCI EM (Emerging Markets) Index: A free float-adjusted market-capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 23 emerging market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. For more information, visit the MSCI web site.

MSCI EAFE (Europe, Australasia, Far East) Index: A free float-adjusted market-capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of the following 21 developed market country indexes: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. For more information, visit the MSCI website.

S&P 400 Index: This index provides investors with a benchmark for mid-sized companies. The index measures the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment.

S&P 600 Index: This index measures the small-cap segment of the U.S. equity market. The index is designed to track companies that meet specific inclusion criteria to ensure that they are liquid and financially viable.

S&P 500 Growth: This index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest growth characteristics by using a style-attractiveness-weighting scheme.

S&P 500 Value: This index is a style-concentrated index designed to track the performance of stocks that exhibit the strongest value characteristics by using a style-attractiveness-weighting scheme.

Bloomberg Commodity Index: Made up of 22 exchange-traded futures on physical commodities. The index currently represents 20 commodities, which are weighted to account for economic significance and market liquidity.

US Trade-Weighted Dollar Index: A weighted average of the foreign exchange value of the US dollar against a subset of the broad index currencies that circulate widely outside the US.

MSCI Emerging Markets Currency Index: sets the weights of each currency equal to the relevant country weight in the MSCI Emerging Markets Index.

Bloomberg US Aggregate Index: The US Aggregate Index covers the dollar-denominated investment-grade fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS pass-through securities, asset-backed securities, and commercial mortgage-based securities. These major sectors are subdivided into more specific sub-indices that are calculated and published on an ongoing basis. Total return comprises price appreciation/depreciation and income as a percentage of the original investment. This index is rebalanced monthly by market capitalization.

Bloomberg US Corporate High Yield Bond Index: This index is composed of fixed-rate, publicly issued, non-investment grade debt.

S&P Sector Performance

The S&P 500 Consumer Discretionary sector comprises those companies included in the S&P 500 that are classified as members of the consumer discretionary sector.

The S&P 500 Consumer Staples sector comprises those companies included in the S&P 500 that are classified as members of the consumer staples sector.

The S&P 500 Energy sector comprises those companies included in the S&P 500 that are classified as members of the energy sector.

The S&P 500 Financials sector comprises those companies included in the S&P 500 that are classified as members of the financial sector.

The S&P 500 Health Care sector comprises those companies included in the S&P 500 that are classified as members of the health care sector.

The S&P 500 Industrials Sector comprises those companies included in the S&P 500 that are classified as members of the industrials sector.

The S&P 500 Information Technology Sector comprises those companies included in the S&P 500 that are classified as members of the information technology sector.

The S&P 500 Materials Sector comprises those companies included in the S&P 500 that are classified as members of the materials sector.

The S&P 500 Communications Services Sector comprises those companies included in the S&P 500 that are classified as members of the telecommunications services sector.

The S&P 500 Utilities Sector comprises those companies included in the S&P 500 that are classified as members of the utilities sector.

The S&P 500 Real Estate Sector comprises those companies included in the S&P 500 that are classified as members of the real estate sector.

US Equity Style Performance

Weekly and monthly style performance charts use Russell 1000, Russell Mid Cap, and Russell 2000 style indexes to represent large cap, mid cap, and small cap respectively.

Russell 1000: Consists of the 1000 largest companies within the Russell 3000 index. Also known as the Market-Oriented Index, because it represents the group of stocks from which most active money managers choose. The returns we publish for the index are total returns, which include reinvestment of dividends. Frank Russell Company reports its indexes as one-month total returns.

Russell 1000 Growth: Market-capitalization weighted index of those firms in the Russell 1000 with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 includes the largest 1000 firms in the Russell 3000, which represents approximately 98% of the investable US equity market.

Russell 1000 Value: Market-capitalization weighted index of those firms in the Russell 1000 with lower price-to-book ratios and lower forecasted growth values. The Russell 1000 includes the largest 1000 firms in the Russell 3000, which represents approximately 98% of the investable US equity market.

Russell 2000: Consists of the smallest 2000 companies in the Russell 3000 Index, representing approximately 7% of the Russell 3000 total market capitalization. The returns we publish for the index are total returns, which include reinvestment of dividends.

Russell 2000 Growth: Market-weighted total return index that measures the performance of companies within the Russell 2000 Index having higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index includes the 2000 firms from the Russell 3000 Index with the smallest market capitalizations. The Russell 3000 Index represents 98% of the of the investable US equity market.

Russell 2000 Value: Market-weighted total return index that measures the performance of companies within the Russell 2000 Index having lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index includes the 2000 firms from the Russell 3000 Index with the smallest market capitalizations. The Russell 3000 Index represents 98% of the of the investable US equity market.

Russell Midcap: Measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 25% of the total market capitalization of the Russell 1000 Index. As of the latest reconstitution, the average market capitalization was approximately $4.0 billion; the median market capitalization was approximately $2.9 billion. The largest company in the index had an approximate market capitalization of $12 billion.

Russell Midcap Growth: Market-weighted total return index that measures the performance of companies within the Russell Midcap Index having higher price-to-book ratios and higher forecasted growth values. The Russell Midcap Index includes firms 201 through 1000, based on market capitalization, from the Russell 3000 Index. The Russell 3000 Index represents 98% of the of the investable U.S. equity market.

Russell Midcap Value: Market-weighted total return index that measures the performance of companies within the Russell Midcap Index having lower price-to-book ratios and lower forecasted growth values. The Russell Midcap Index includes firms 201 through 1000, based on market capitalization, from the Russell 3000 Index. The Russell 3000 Index represents 98% of the of the investable U.S. equity market.

P/E Relative to Rest of World

TOPIX: This free-floated-adjusted index tracks all domestic companies of the exchange’s First Section.

US Fixed Income Valuation

ICE BofAML Option Volatility Estimate Index (MOVE): A yield curve-weighted index of the normalized implied volatility on one-month treasury option.

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