Stock Market Surges to Record Highs Amid Economic Optimism
The stock market experienced a notable increase last week, with major indices setting fresh record highs. The S&P 500 led the charge, making an impressive leap of 0.4% to close at an unprecedented 5,254.35. Similarly, the Dow Jones Industrial Average observed a robust growth of 0.8%, ending the week at 39,807.37. Both indices not only achieved record closes but also underscored the market's bullish outlook, with the S&P 500 reaching a new all-time high within the trading session.
Contrastingly, the Nasdaq Composite faced a slight setback, experiencing a decline of 0.3%, which saw its week’s end at 16,379.46. Despite this, for the entire first quarter, the S&P 500 saw an impressive increase of 10.2%, marking its highest first-quarter rise since a 13.1% jump in 2019. The Dow similarly reported a 5.6% gain for the same period, its best start since a 7.4% increase in 2021, while the Nasdaq concluded the quarter up by 9.1%.
The tech sector, led by Nvidia, last year's top performer, remained the key driver behind this quarter's and month's market gains. Nvidia's stock surged an astonishing 82.5% over the quarter, fueled by the unrelenting demand for artificial intelligence technology, and rose a further 14.2% in March.
The US labor market also showed signs of strength, with initial unemployment insurance claims for the week ending March 16 reported at 210,000, slightly below economists' expectations. Additionally, the US economic growth rate for the fourth quarter was revised upwards to an annual pace of 3.4%, exceeding the initial estimate of 3.2%.
The upcoming week is poised to bring critical economic updates, including a spotlight on Jerome Powell's speech about the economic outlook on April 3. The markets are also keenly awaiting the release of the March ISM Manufacturing and Services PMI data, alongside the highly anticipated average hourly earnings and nonfarm payroll reports on Friday.
Despite the minimal news on inflation in March, the data available suggested a softer-than-expected trend. Specifically, the core personal consumption expenditures (PCE) price index for February matched consensus forecasts, indicating a year-over-year increase of 2.8% and a monthly uptick of 0.3%, both aligning with expectations.
The March employment data will be prominently observed, as economists forecast that nonfarm payrolls grew by 200,000 last month, a decrease from 275,000 in February. They also anticipate that average hourly earnings rose by 0.3% in March while the unemployment rate remained stable at 3.9%.
In summary, the stock market's performance and the underlying economic indicators highlight an optimistic economic outlook, with investors closely watching upcoming data on employment and inflation for further guidance.
Analyst comment
Positive news: The stock market surged to record highs, with the S&P 500 and Dow Jones Industrial Average reaching unprecedented levels. The tech sector, led by Nvidia, continued to drive market gains. The US labor market showed signs of strength, and the US economic growth rate was revised upwards.
As an analyst, I predict the market will continue its positive momentum with investors closely watching upcoming employment and inflation data for guidance.
