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Weekly Recap | March 25, 2024

Weekly Recap | March 25, 2024

March 27, 2024
Weekly Recap

March 18-22, 2024 Recap

S&P 500 Posts Best Week of the Year

Three Rate Cuts Affirmed
All three major U.S. equity indices posted strong gains last week with the S&P 500 capping its largest weekly gain of the year. Investor appetites soared after Federal Reserve policymakers affirmed projections for three rate cuts this year at their March FOMC policy meeting. Moreover, Fed Chairman Powell did not push back against Wall Street expectations for 2024 rate cuts to begin in June. Bullish sentiment was also supported by the continuing upswell in artificial intelligence (AI) related companies and an improving macro-economic outlook.

For the Week…
The S&P 500 jumped 2.31%, clinching its 20th new all-time high for the year, the sixth greatest tally since 1945. The Dow Jones Industrial Average climbed 1.97% and the tech-heavy Nasdaq Composite leapt 2.86%. The small cap focused Russell 2000 Index clawed back 1.61% of its 2% prior week loss.

Leading Indicators Rebound
The U.S. Leading Economic Indicator (LEI) Index edged up 0.1% to 102.8 in February, topping -0.3% expected and follows a 0.4% January decline. The February increase is the first positive reading in two years. Strength in manufacturing hours worked, rallying stock prices, and increased residential construction were the primary drivers behind the rebound. Index officials noted however that consumers' expectations and the ISM Index of New Orders have yet to recover.

Weekly Sector Insights
All but one of the 11 major sector groups posted gains last week, with Consumer Discretionary (+4.78%), Technology (+2.94%), and Industrials (+2.90%) leading the way higher. Materials (+1.00%) and Healthcare (+0.40%) gained the least while Real Estate (-0.38%) was the sole decliner. Year-to-date, Communication Services (+16.70%), Technology (+14.13%), and Energy (+11.23%) remain the top 2024 leaders.

Treasury Yields Ease
The yield on 10-year Treasury notes eased 0.10% last week, ending Friday at 4.213%. The yield on policy-sensitive 2-year Treasury notes slipped 0.15% to end the week at 4.60%.

The Latest from @CeteraIM

Market Breadth Improving

Recovery in Manufacturing

Fed Affirmation of Three Rate Cuts in 2024

Economic Calendar

Monday, March 25
Chicago Fed National Activity, New Home Sales.

Tuesday, March 26
Durable Goods Orders, S&P Case-Shiller Home Prices, Consumer Confidence.

Wednesday, March 27
Mortgage Applications Activity.

Thursday, March 28
Jobless Claims, 1Q GDP Revision, PCE Prices (4Q), Chicago Business Barometer, Pending Home Sales, Consumer Sentiment.

Friday, March 29
Good Friday Holiday, Equity Markets Closed; PCE Prices (Feb), Personal Incomes and Outlays.

There is a huge backlog of apartment units under construction. With construction near record levels, there will be a lot of supply coming over the next year as these units are completed. Market rents are already slowing and a large increase in supply could fuel additional rent disinflation, which will eventually feed into the shelter component of the consumer price index (CPI).

This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.

About Cetera® Investment Management
Cetera Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.

About Cetera Financial Group
“Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), and Cetera Financial Specialists LLC. All firms are members FINRA / SIPC. Located at 655 W. Broadway, 11th Floor, San Diego, CA  92101.

Disclosures
Individuals affiliated with Cetera firms are either Registered Representatives who offer only brokerage services and receive transaction-based compensation (commissions), Investment Adviser Representatives who offer only investment advisory services and receive fees based on assets, or both Registered Representatives and Investment Adviser Representatives, who can offer both types of services.

The material contained in this document was authored by and is the property of Cetera Investment Management LLC. Cetera Investment Management provides investment management and advisory services to a number of programs sponsored by affiliated and non-affiliated registered investment advisers. Your registered representative or investment adviser representative is not registered with Cetera Investment Management and did not take part in the creation of this material. He or she may not be able to offer Cetera Investment Management portfolio management services.

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No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.

All economic and performance information is historical and not indicative of future results. Investors cannot directly invest in unmanaged indices. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.

Glossary

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. 

The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe. 

The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index. 

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. 

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. 

The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. 

The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years. 

The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years. 

The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity. 

The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted. 

The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index. 

The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.

 The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.

 The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.

The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.