Monthly Market Update – February 2024

By Simmons Investment Advisors on March 1, 2024

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Headlines From Last Month:

• Stocks continued their rally from the October 27th low, mainly on earnings results.
  • The S&P 500 closed above 5,000 for the first time on February 9th and didn’t stop there, closing the month at another all-time high.  For the week ending February 9th, it rose 14 of the previous 15 weeks for the first time since 1972.
  •  The Nasdaq finally set a record high, finishing the month at its first new high since November 2021. 
  • The Dow set its high on February 23rd.
• Japan’s Nikkei 225 stock index also hit an all-time high, eclipsing the previous high from 1989:
  • Year-to-date, it’s up 17.04%, after rallying 28.24% in 2023.
  • The rally can be attributed to strong corporate profits, foreign investors, stimulative central bank policies, and the downturn in China.
  • Japan’s economy remains in a recession, with the government keeping interest rates low to encourage inflation and stop the yen from weakening.
• The Israel-Gaza War:
  • The war is now in its fifth month.
  • The US continues to launch strikes targeting Yemen’s Houthi militants.
• Oil Prices rose 3.18% in February. Oil is down -16.46% from its September 27th high.
• Gold gained 0.23% last month, having rallied 13.57% in 2023, due to the geopolitical tensions.
• Economic Data:
  • Employment/Unemployment:
    • US nonfarm payrolls:
      • Increased by 353K in January, much stronger than the expected 185K. 
      • November payrolls were revised up by 9K.
      • December numbers were revised up from 117K to 333K.
    • Unemployment remained at 3.7%, vs the expected rise to 3.8%.
  • US GDP (Gross Domestic Product) for Q4 was revised down from 3.3% to 3.2% ⁽ⁱ⁾.
  • Retail Sales:
    • Dropped -0.8% in January, much more than the expected decline of -0.3% ⁽ⁱ⁾.
    • December’s number was revised down from a rise of 0.6% to 0.4% ⁽ⁱ⁾.
  • Inflation:
    • Consumer Price Index:
      • December’s CPI was revised down from 0.3% to 0.2%.
      • January’s CPI rose 0.3% (vs expectations for 0.2%) from last month, increasing 3.1% (vs expectations for 2.9%) compared to a year ago ⁽ⁱ⁾.
      • Core CPI (excludes food and energy costs) rose 0.4% from the prior month (vs the expected 0.3%) and 3.9% year over year, vs estimates for 3.7% ⁽ⁱ⁾.
    • Producer Price Index:
      • PPI rose 0.3% in January vs estimates for a gain of 0.1%, up 0.9% on a year-over-year basis ⁽ⁱ⁾.
      • Core PPI (excludes food and energy) increased 0.5% vs estimates for a 0.1% increase ⁽ⁱ⁾.
    • Personal-Consumption Expenditures Index:
      • PCE rose 0.3% in Jan and 2.4% on a yearly basis, both as expected ⁽ⁱ⁾.
      • Core PCE (excludes food and energy) rose 0.4% (as anticipated), up 2.8% on a year-over-year basis (as anticipated) ⁽ⁱ⁾.
    • Consumer Spending
      • Dropped -0.8% in January, weaker than the -0.2% estimate ⁽ⁱ⁾.
      • December’s number was revised down from a gain of 0.7% to an increase of only 0.4% ⁽ⁱ⁾.
    • Personal Income jumped 1.0%, above the forecast for an increase of 0.3% ⁽ⁱ⁾.
    • Personal Spending decreased -0.1%, vs the estimate for an increase of 0.2% ⁽ⁱ⁾.

US Equities:

• Although technology stocks have been leading the way, healthcare and industrials sectors hit new highs in February.  Financials and materials are about 3% from their peaks.
• From their recent lows (late October ’23), the S&P is up 24.18%, the Dow 20.63% and the Nasdaq 28.29%.
• Growth vs. Value:
  • Growth (Russell 1000 Growth Index) jumped 6.72% while Value (Russell 1000 Value Index) gained 3.45% in February.
  • For the year, Growth is up 9.34% and Value is up 3.41%.
• Small-cap stocks (Russell 2000 Index) rallied 5.52% last month, now up 1.37% for the year.

• Monthly performance, calculated on a price return basis:
  • Dow rose 2.22%
  • S&P 500 gained 5.17%
  • Nasdaq rallied 6.12%
• Year-to-date performance, calculated on a price return basis:
  • Dow is up 3.47%
  • S&P 500 is up 6.84%
  • Nasdaq has jumped 7.20%

US Fixed Income:

• The 10-year US Treasury yield rose in February, finishing at 4.28%, below the October 19th level of 4.98% which was its highest level since 2007 ⁽ⁱⁱⁱ⁾.
• The shorter end of the curve also rose due to uncertainty on when the FOMC might begin lowering overnight rates.
• The 2-year to 10-year inverted yield curve deepened last month to 35 basis points, compared to 13 basis points at the end of January.

• Yields on US Treasuries increased last month:
  • 1 year – 4.97% ^(iv)
  • 2 year – 4.63% ^(iv)
  • 10 year – 4.28% ^(iv)
• As a point of reference, at January month-end, yields were at:
  • 1 year – 4.67% ^(iv)
  • 2 year – 4.28% ^(iv)
  • 10 year – 4.15% ^(iv)

Regards,

Mike & Steve

DISCLOSURE: All data is as of previous month-end (February 29, 2024).  Sources include www.cnbc.com (i), https://www.cnn.com/business (ii), https://finance.yahoo.com (iii), other public websites, Hightower Advisors, LLC (iv), FactSet (v), and  Barron’s (vi).