What's Driving the Markets?

What's Driving the Markets?

February 02, 2024

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

Metrics that Matter Video


Metrics that Matter Newsletter


Thornburg Article


January 30, 2024

Attached above is our weekly newsletter, The Metrics that Matter, which reviews key drivers of recent market performance and monitors important economic updates for the week ahead.The S&P 500 gained 1.07% last week after breaking through its all-time high back on January 19th. The index notched four consecutive all-time highs throughout last week before falling slightly on Friday and has now posted 12 weekly advances out of the last 13 weeks. So, what’s been driving the recent rally in stock prices? Last week we learned that the macro environment has been supportive for equity markets with an attractive combination of stronger-than-expected economic growth while inflation continues to cool. The government's preliminary reading for fourth quarter GDP surprised to the upside, showing that real GDP rose by 3.3% on a quarter-over-quarter annualized rate, surpassing expectations for 2% growth. Although a slight dip from the third quarter's robust 4.9% level, the economy remains well above its long-term growth trend of 2%, primarily propelled by robust consumer spending. And on Friday, we received an update on the Fed’s preferred inflation gauge for the month of December. The Core PCE Price index eased from a 3.2% year-over-year level in November to 2.9% in December. This marked the lowest level of core inflation since March 2021 and came in slightly softer than economists had been expecting (+3.0%). The inflation index has eased considerably in recent months. On a six-month basis, the annualized rate of core inflation remained steady at just 1.9%, marking two consecutive months below the Fed’s 2% target. The Fed meets this week to determine if there are any changes to their monetary policy. Expectations are for the Fed to hold its policy rate steady at 5.25%-5.50%, with more of a focus on Fed Chairman Jerome Powell’s post-meeting press conference where investors will look for any insight into future policy rate decisions. Last week’s data suggests that the Fed has been able to ease inflation considerably over the past year without a major disruption to economic growth, resulting in an attractive environment for stocks. In this week’s newsletter we dive deeper into last week’s economic reports and provide a historical analysis of how the S&P 500 has performed after initially breaking through a previous peak in the market. So, to read more, please click the link to the newsletter.To read more about the current state of the U.S. consumer, please click the link to newsletter.

The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.