The S&P growing by 10.8% in the first quarter is considered historically significant, closing with a double-digit gain for the second consecutive quarter, which has happened only nine times since 1940.These events have always indicated positive signals for the market. Moreover, the S&P 500 has recorded gains for five consecutive months, leading to an overall price return of 25.3%. Such periods have also happened only nine times since 1940, historically indicating a positive signal for the market in all cases. Previous 5-month record periods have historically led to the following 12 months of positive performance. *

Technological giants such as NVIDIA, Microsoft, or Meta significantly drove major indices in the first quarter of 2024, as evidenced by the stocks of these companies reaching their record highs. However, according to a report from Goldman Sachs, it is clear that the broader market revitalization market has also done the trick. This can be seen in the S&P 500 equivalent - S&P 500 Equal Weight Index (EWI), in which all entities have equal weight of 0.2%. This version of index grew by 7% over the last quarter. Goldman states that the index was led mainly by the communication services sector, which saw a 16% increase, while real estate performed the worst, dropping by 1%. *

Source: Investing.com*

Other American indices similarly ended the first quarter on very good note. The Nasdaq Composite rose by 9%, while the Dow Jones Industrial Average increased by 6.1%, all of them reaching their all-time highs during this period. Despite the optimism, there are also concerns about whether the growth will persist due to persistent inflation in the USA. At the beginning of the year, there were expectations of interest rate cuts from March, now these expectations settled on June. On Thursday evening, stocks fell after some Federal Reserve officials expressed that if inflation does not continue to decline, rate cuts may not come as soon as expected. * Asian and European stock markets were also affected by these comments.

Source: Investing.com*

Although European stocks have not risen as sharply as their American counterparts in recent months, the Stoxx 600 index saw its second consecutive profitable quarter, with a 7% increase, amid optimism about possible ECB monetary policy easing and technological stocks rally.* The Dax index, which tracks the 40 largest German companies, rose by more than 10% during the first quarter, indicating signs of recovery in the German economy, which is one of the European driving forces.* Among the drivers of the German stock market were mainly Rheinmetall AG, joined by the automotive and financial sectors. According to analysts, investors in Europe have placed more trust in cyclical sectors such as industry and banking and are less concerned about recession. Industrial and banking sectors in the eurozone saw significant growth in the first three months of the year. At the end of the first quarter, Citi analysts also emphasized the growing investors' preference for European stocks over the ones from the US, due to uncertainty about the FED's monetary policy, while in Europe, GDP growth and declining inflation support more positive outlook for rate cuts. [1]

Source: Investing.com*

For investors seeking stability and diversification, stock indices are an ideal choice. Their growth in the first quarter suggests a revival in the broader market spectrum compared to 2023, when it relied mostly on few large technology companies, while other sectors were experiencing difficulties. Inflation, industry, or unemployment data in the USA and other world economies always significantly influence institutions' decisions on their monetary policies and ultimately, the future development of stock markets.

* Data relating to the past are not a guarantee of future returns.

[1] Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. Forward-looking statements inherently involve risk and uncertainty because they relate to future events and circumstances that cannot be predicted and actual developments and results may differ materially from those expressed or implied in any forward-looking statements.

Warning! This marketing material is not and must not be understood as investment advice. Data relating to the past are not a guarantee of future returns. Investing in foreign currency may affect returns due to fluctuations. All securities transactions can lead to both profits and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance. InvestingFox is a trademark of CAPITAL MARKETS, o.c.p., a.s. regulated by the National Bank of Slovakia.

Sources:

https://www.google.com/finance/quote/.INX:INDEXSP?sa=X&ved=2ahUKEwiZn4jc7aqFAxW1nf0HHUe5AuwQ3ecFegQIFRAf

https://www.nasdaq.com/articles/march-first-quarter-2024-review-and-outlook

https://www.investing.com/news/stock-market-news/goldman-sp-500-delivers-best-q1-display-since-2019-as-rally-broadens-beyond-big-tech-432SI-3365128

https://www.forbes.com/advisor/investing/stock-market-outlook-and-forecast/

https://www.investing.com/news/economy/feds-kashkari-says-2024-rate-cuts-under-threat-if-inflation-continues-to-stall-3366340

 https://www.richmondfed.org/press_room/speeches/thomas_i_barkin/2024/barkin_speech_20240404

https://www.euronews.com/business/2024/03/19/germanys-economy-brightens-up-could-the-dax-index-reflect-that

https://www.businesstimes.com.sg/companies-markets/capital-markets-currencies/europe-stoxx-600-closes-second-straight-quarter-gains

https://www.investing.com/news/stock-market-news/citi-positioning-increasingly-bullish-in-europe-versus-us-432SI-3352844