U.S. stocks close the trading session lower: In the last 30 minutes of Wall Street trading,
stocks erased their gains as investors rebalanced their investment portfolios following
a buying wave that increased their value by more than $4 trillion this year.

Content

Closing Trades

Economic Data

Central Banks

U.S. Stock Index

Market Movements

Closing Trades

Stocks closed lower for the third consecutive day, after a frenzied buying period
that saw the S&P 500 index rise by nearly 10% in three months.
According to recent estimates from Morgan Stanley,
Funds are expected to sell about $22 billion in global stocks and buy $17 billion
in fixed income to return to original asset allocation levels.
The U.S. stock index is on track to record five consecutive months of gains from November
to March, a feat accomplished only once in this century, in 2013.
Now, traders are debating whether the path will become more difficult
to continue rising as stock valuations remain relatively high compared to history.
“We still expect to see normal pullbacks along the way,” said Keith Lerner at Truist Advisory Services.
“However, until the weight of the evidence shifts, we suggest investors stay
with the primary market trend, which is up, and view pullbacks as opportunities.”
The data supports both arguments as the big debate continues
on how concentrated or broad this year’s S&P 500 rise has been, approaching 5200.
After the year began with gains focused on tech-heavy sectors,
the rally broadened to include other groups like commodities and industrials.
However, the contribution to total returns shows that 60%
of the gains in the index were driven by just six stocks:
Nvidia, Microsoft Corp., Meta Platforms Inc., Amazon.com Inc., Eli Lilly & Co., and Broadcom Inc.

Economic Data

As traders prepared for the Fed’s preferred inflation gauge on Friday – when markets will be closed
they analyzed the latest economic readings. U.S. consumer confidence remained steady,
durable goods orders rose, and home price growth accelerated faster since 2022.
“Expect market volatility in the coming quarters with mixed data
and questions about how long the Fed intends to pause,”

said Victoria Fernandez at Crossmark Global Investments.
We would not be surprised to see another rate cut priced out of the market, pushing yields slightly higher
from current levels, as economic data shows strength and current levels do not appear to be very restrictive.”

Central Banks

For stocks to justify their multiple expansion in recent months, global central banks must ease monetary policy this year.
According to Marko Kolanovic at JPMorgan Chase & Co, companies must deliver healthy earnings growth.
“Overall, if central banks turn out to be more dovish than currently projected,
but without this being accompanied by growth disappointments,
current equity multiples could be defended,” he wrote this week.
He added that equity multiples must fall if earnings disappoint and central banks are more restrictive.
Institutional, retail, and hedge fund clients of Bank of America Corp.
were all net sellers of U.S. equities in the week ended March 22,
while corporations buying their shares were the sole net buyers.

The U.S. stock index

The S&P 500 is on track to witness its fifth consecutive month of gains,
with a cumulative price return of about 25%.
The rise was supported by an economy that exceeded expectations,
future corporate earnings estimates that reached record levels,
technological leadership, and expectations that the Federal Reserve will begin to lower rates later this year,
according to Lerner at Truist.
“Strong price momentum, as we’ve seen over the past five months,
tends to occur during bull markets and is a sign of underlying strength,” he added.
While the markets seem to be stretching,
similar past periods of strength also tended to be positive when looking forward 12 months
with stocks rising every time and showing an average gain of 14%, Lerner added.
“Stocks have risen in the first quarter in anticipation of the first-rate cuts,”
said Anthony Saglimbene at Ameriprise.
“We have likely already entered a period where the Federal Reserve
is now less likely to surprise the market from here on out.”
Prices will likely continue rising until late March, given the lack of evidence of technical deterioration,
according to Mark Newton at Fundstrat Global Advisors.
“I continue to see the U.S. stock market as technically attractive,
and I do not feel there is enough risk to justify a sell-off at this time,”
Newton said. He concluded that a rise in the S&P 500 to 5350-5400
is possible until mid-April – before consolidation begins.

Market movements

Stocks
The S&P 500 was down 0.3%
The Nasdaq 100 fell 0.4%
The Dow Jones Industrial Average was virtually unchanged
Currencies
The Bloomberg U.S. Dollar Index was virtually unchanged
The euro was steady at 1.0830
The British pound was steady at 1.2625
The Japanese yen fell 0.1% to 151.58 against the dollar
Cryptocurrencies
Bitcoin fell 2% to $69,538.32
Ether fell 1.9% to $3,561.06
Commodities
West Texas Intermediate crude fell 0.6% to $81.49 a barrel
Spot gold rose 0.3% to $2,177.89 an ounce

U.S. stocks close lower

U.S. stocks close the trading session lower.

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