U.S. stocks on Tuesday made marginal gains, after economic data showed some moderation in home prices. Some volatility could be expected in this holiday-shortened week as market participants make tweaks to their portfolios towards the end of the quarter.
The tech-heavy Nasdaq Composite (COMP:IND) added 0.24% to 16,424.26 points in afternoon trade, while the benchmark S&P 500 (SP500) climbed 0.21% to 5,229.03 points. The blue-chip Dow (DJI) was up 0.22% to 39,399.95 points.
Of the 11 S&P sectors, seven were in the green.
The S&P (SP500) is approaching an advance of nearly 10% for Q1 2024, driven by interest rate cut expectations and a relentless rally in technology stocks. Wall Street’s benchmark index has achieved several milestones in the quarter, including surging past 5,000 points for the first time ever on February 8, the 5,100 mark on February 23 and the 5,200 level last Wednesday.
The Federal Reserve last week stuck to an outlook of three expected interest rate cuts in 2024, while signaling higher growth. Moreover, chair Jerome Powell expressed optimism that inflation was largely trending in the right direction. The Fed’s actions and Powell’s comments led to a surge in soft landing hopes, boosting sentiment and sending the S&P 500 (SP500) to its best weekly advance of the year on Friday.
“The construction of the soft landing bull market narrative continues. The S&P 500 (SP500) index made yet another all-time high last week (on both a cap-weighted and equal-weighted basis), and 81% of the index is now above their 200-day moving average. The soldiers have joined the generals, and there is little question that a cyclical bull market is well underway,” Fidelity’s Jurrien Timmer said on X (formerly Twitter).
“How will this rally go? Over the past seven decades the shallowest cyclical bull was 48% (1966-1968), and the strongest bull was 169% (1994-1998). The current cycle stands at 49% and counting. Historically, in most cases the market has gained at least 60-65%, which gives this cycle some more room to run. Whether it will be the soldiers that dominate the price action for the remaining innings remains to be seen,” Timmer said.
On Tuesday, the economic calendar had some encouraging data on the housing market in the form of the Federal Housing Finance Agency’s (FHFA) monthly report. According to the FHFA, U.S. house prices unexpectedly ticked down 0.1% M/M in January, compared to a consensus for a rise of 0.2%. At the same time, the S&P CoreLogic Case-Shiller U.S. national and 20-city composite price indexes showed a continued decrease of 0.1% in January.
The FHFA and S&P readings were positive as high housing prices have been a key driver of inflation.
Additionally, the Conference Board said that consumers’ assessment of the present situation improved in March, but also noted that they became more pessimistic about the future. Finally, the Richmond Fed’s monthly survey showed a slowing down in manufacturing activity in March.
Treasury yields were mixed after a record $67B 5-year note auction traded through by 1 basis point. The longer-end 30-year yield (US30Y) was little changed at 4.41%, while the 10-year yield (US10Y) was also largely flat at 4.24%. The shorter-end more rate-sensitive 2-year yield (US2Y) was up 2 basis points to 4.61%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Turning to active stocks, UPS (UPS) was the top percentage loser on the S&P 500 (SP500), after the parcel delivery giant set financial targets for 2026 ahead of an ongoing investor conference.