Home Markets Stock Market Rally: 22 Record Highs in Q1 Signal Strong Economic Recovery

Stock Market Rally: 22 Record Highs in Q1 Signal Strong Economic Recovery

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Vintage camera with paper note on wooden table.
Vintage camera with paper note on wooden table. Image by jcomp on Freepik

The stock market kicked off 2024 the right way, with a new record high every third day for the first 22 days of the year. This has been a rousing start to the year for investors, with key metrics pointing to a solid start to 2024. Expect the good times to continue.

Despite ongoing geopolitical upheaval and economic setbacks worldwide, the stock market’s exceptional performance in this first quarter of 2024 reflects the resilience of global markets. The strength of corporate earnings, better economic data, and movement on a critical policy front have heartened investors.

decided to take a hit to already-modest future returns on the equity side with the prospect of some cushioning in the form of bonds and cash

– one manager wrote.

Robust earnings reports “the bulk of S&P 500 firms have beaten estimates by 24 percent this season” and positive economic data on everything from jobs, retail, and factory activity drive stock indices to new record highs in the year’s first three months. The market rally is broad-based, with nearly all major stock indices touching all-time highs this year. The pandemic-induced slowdown in the global economy looks like it is going in the rear-view mirror.

Analysts say that several important factors have underpinned international markets. Economic expansion has maintained momentum even though many economies have raised GDP growth forecasts. It has been accompanied by healthy labor market conditions, with unemployment falling consistently over a long period in many economies.

Earnings at corporations have also beaten estimates, as many have reported healthy profits from solid consumer demand and cutting costs. A rally in individual stocks has encouraged investors in the entire market.

Positive developments on the geopolitical front have played their part: diplomatic progress on regional conflicts and trade disputes has meant less uncertainty for investors. With issues such as Brexit finally resolved – and trade deals at least temporarily on track with the phase-one agreement between the US and China – investors have “decided to take a hit to already-modest future returns on the equity side with the prospect of some cushioning in the form of bonds and cash,” one manager wrote.

While the market long term remains bullish and market mavens, in the main, have turned optimistic over the economy, corporate earnings, and projections, analysts caution that there can be sporadic volatility caused by a bit of inflation, higher interest rates, and geopolitical considerations that are, nonetheless, expected to be mitigated by the strong fundamentals of the economy and corporate pyramid.

Financial advisors urged investors to ‘stay the course’, maintain a diversified portfolio, and be unworried by short-term fluctuations. As in 1999, staying focused on the fundamentals and on investment objectives, rather than letting market turbulence shake confidence and dilute good judgment, can help investors navigate unnerving but ultimately transient moments like Downtown Chicago.

In conclusion, thanks to the bullish performance of the stock market in Q1 2024 – with a flurry of 22 record highs in three months – it is clear that there is confidence in taking bets on the economy. Due to the combination of robust economic data, good corporate results, and a less troubling geopolitical scenario, the market shows all the signs of more substantial gains in the next quarter.

Source: www.nytimes.com March 29, 2024

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