Closing Stock Market SummaryThe stock market closed out this final session of Q1 with sizable gains. The main indices moved up right out of the gate and spent most of the day inching higher. A sharp upside move in the late afternoon had the S&P 500 close above the 4,100 level.
The positive disposition today followed some relatively pleasing inflation data this morning. Briefly, the PCE Price Index slowed to 5.0% yr/yr in February from 5.3% in January while the core-PCE Price Index, the Fed's preferred inflation gauge, dipped to 4.6% from 4.7%. The direction of these moves is a welcomed development, but the pace at which these indices are decelerating leaves a bit to be desired.
Investors were also reacting to the Michigan Consumer Sentiment survey for March, which showed that year-ahead inflation expectations slowed to 3.6% from 3.8% in the preliminary reading and 4.1% in the final February reading.
Strength from the mega cap space had an outsized influence on index level performance today and throughout Q1. The Vanguard Mega Cap Growth ETF (MGK) rose 1.8% versus a 1.5% gain in the Invesco S&P 500 Equal Weight ETF (RSP) and a 1.4% gain in the market-cap weighted S&P 500. The MGK rose 18.9% this quarter versus a 2.4% gain in the RSP.
All 11 S&P 500 sectors closed with gains led by consumer discretionary (+2.6%), real estate (+2.2%), and communication services (+2.1%). Meanwhile, the energy (+0.6%) and utilities (+0.8%) sectors fell to the bottom of the pack. Notably, the energy and utilities sectors were among the worst performers this quarter with losses of 5.6% and 4.0%, respectively. The financial sector was another top laggard this quarter, falling 6.1%.
Treasuries saw an uptick in buying interest following this morning's data releases. The 2-yr note yield settled the session down five basis points to 4.06% and the 10-yr note yield fell six basis points to 3.49%.
- Nasdaq Composite: +16.8% YTD
- S&P 500: +7.0% YTD
- S&P Midcap 400: +3.4% YTD
- Russell 2000: +2.3% YTD
- Dow Jones Industrial Average: +0.4% YTD
Reviewing today's economic data:
- February Personal Income 0.3% (consensus 0.3%); Prior 0.6%; February Personal Spending 0.2% vs consensus of 0.3%; Prior was revised to 2.0% from 1.8%; February PCE Prices 0.3% ( consensus 0.4%); Prior 0.6%; February PCE Prices - Core 0.3% ( consensus 0.4%); Prior was revised to 0.5% from 0.6%
- The key takeaway from the report is that it only showed a slight deceleration in the yr/yr PCE and core-PCE price indices, which gives the Fed an argument to continue hiking rates.
- March Chicago PMI 43.8 (consensus 42.5); Prior 43.6
- March Univ. of Michigan Consumer Sentiment - Final 62.0 ( consensus 63.4); Prior 63.4
- The key takeaway from the report is that the failure of Silicon Valley Bank had a limited impact on sentiment, which had already been pressured by growing concerns about a potential recession. On a positive side, year-ahead inflation expectations receded to 3.6% from 4.1% in February.
Looking ahead to Monday, market participants will receive the following economic data:
- 9:45 a.m. ET: March IHS Markit Manufacturing PMI - Final (prior 49.3)
- 10:00 a.m. ET: February Construction Spending (consensus 0.0%; prior -0.1%) and March ISM Manufacturing Index ( consensus 47.5%; prior 47.7%)