Markets were defiant in March. Last month, they shrugged off crisis after crisis and posted impressive gains.
On Friday, the S&P rose 1.44%, the Dow increased 1.26% and the Nasdaq Composite jumped 1.74%. For March, the S&P was up 3.51%, the Dow 1.89% and the Nasdaq 6.69%. For the S&P and Nasdaq, the quarter was even better than that: The S&P rose 7.03%, and the Nasdaq leaped 16.77% — its best quarter since 2020.
I started off by saying markets were "defiant" — implying they were behaving contrary to how they should, given the economic reality — but I admit that's a little unfair. Markets did have reasons to rally despite the headwinds in March.
February's core PCE came in lower than markets had expected, a welcome relief after the month's consumer price index, excluding food and energy prices, was higher than estimated.
That's good news for those worried about inflation and higher inflation rates. For technology companies, that's more than good news — it's music to their ears. Tech stocks benefit the most from lower interest rates, because their valuation tends to depend on future earnings, which are worth less when interest rates are high.
The prospect of slower interest rate hikes, combined with investors' perception of tech as a haven from the banking crisis, meant tech was a big winner in March. Nvidia has surged a staggering 87.4% this year — though Meta's 72.7% pop and Tesla's 58.8% jump aren't too shabby either.
What's more important, however, is a stock's performance in the future. Investors are hoping April, historically a stellar month for markets, will be strong again this year. The March jobs report, coming out this Friday, will put that trend to the test. If the number of jobs added remains persistently high, it'll be a battle of two stubborn markets — the labor market and the stock market — until one finally caves.
