February was a solid month for equities, but bonds struggled amidst stronger growth and increased inflation fears. The CPI in January increased 0.3 percent after rising less (0.2 percent) in December, with a year-over-year increase of 3.1 percent.
Personal consumption expenditure numbers were released in late February and were also higher at 0.3 percent for January and 2.4 percent year over year. The same patterns as noted in prior releases were evident: goods inflation was lower, and services inflation was higher (including housing, which was notably strong). This data, coupled with strong employment numbers, fueled bond market anxiety about interest rate cuts materializing in the near term.
The table below shows how February 2024 performance for equity, fixed income and commodities compares to performance for the first two months of the year.
February 2024 Investment Performance v. Year-to-Date Performance
|
Equities |
February 2024 (%) |
Year to Date 2024 |
|
All Cap U.S. Stocks |
|
|
|
Russell 3000 |
5.4 |
6.6 |
|
Growth |
6.9 |
9.2 |
|
Value |
3.7 |
3.5 |
|
Large Cap U.S. Stocks |
|
|
|
S&P 500® |
5.3 |
7.1 |
|
Russell 1000 |
5.4 |
6.9 |
|
Growth |
6.8 |
9.5 |
|
Value |
3.7 |
3.8 |
|
Mid Cap U.S. Stocks |
|
|
|
S&P 400 |
5.9 |
4.1 |
|
Russell Midcap |
5.6 |
4.1 |
|
Growth |
7.5 |
6.9 |
|
Value |
4.8 |
2.9 |
|
Small Cap U.S. Stocks |
|
|
|
S&P 600 |
3.3 |
-0.8 |
|
Russell 2000 |
5.7 |
1.5 |
|
Growth |
8.1 |
4.7 |
|
Value |
3.3 |
-1.4 |
|
International |
|
|
|
MSCI EAFE NR (USD) |
1.8 |
2.4 |
|
MSCI EAFE NR (LOC) |
3.0 |
5.7 |
|
MSCI EM NR (USD) |
4.8 |
-0.1 |
|
MSCI EM NR (LOC) |
5.1 |
1.4 |
|
Fixed Income |
February 2024 (%) |
Year to Date 2024 |
|
Bloomberg |
|
|
|
U.S. Aggregate |
-1.4 |
-1.7 |
|
U.S. Treasury: 1-3 Year |
-0.4 |
-0.1 |
|
U.S. Treasury |
-1.3 |
-1.6 |
|
U.S. Treasury Long |
-2.3 |
-4.4 |
|
U.S. TIPS |
-1.1 |
-0.9 |
|
U.S. Credit: 1-3 Year |
-0.2 |
0.2 |
|
U.S. Intermediate Credit |
-0.9 |
-0.7 |
|
U.S. Credit |
-1.4 |
-1.6 |
|
U.S. Intermediate G/C |
-1.0 |
-0.8 |
|
U.S. Govt/Credit |
-1.4 |
-1.6 |
|
U.S. Govt/Credit Long |
-2.4 |
-3.9 |
|
U.S. MBS |
-1.6 |
-2.1 |
|
U.S. Corp High Yield |
0.3 |
0.3 |
|
Global Aggregate (USD) |
-1.3 |
-2.6 |
|
Emerging Markets (USD) |
0.4 |
-0.2 |
|
Morningstar/LSTA |
|
|
|
Leveraged Loan |
0.9 |
1.6 |
|
Alternatives |
December 2023 |
All 2023 |
|
Bloomberg Commodity |
-1.5 |
-1.1 |
|
S&P GSCI |
0.9 |
5.4 |
Sources: Standard & Poor's, Bloomberg, MSCI and Russell
The S&P indices are a product of S&P Dow Jones Indices, LLC and/or its affiliates (collectively, “S&P Dow Jones”) and has been licensed for use by Segal Marco Advisors. ©2024 S&P Dow Jones Indices, LLC a division of S&P Global Inc. and/or its affiliates. All rights reserved. Please see www.spdji.com for additional information about trademarks and limitations of liability.
Equity markets
Global stocks continued the January trend discussed in our last market review and were positive in February, including emerging markets, an asset class that has been a laggard of late. Small-cap growth stocks led the month with a return of 8.1 percent, as growth stocks across all capitalization sizes continued to outperform value stocks.
Notably, all sectors of the S&P 500® Index had a positive month, led by the Consumer Discretionary (+8.7 percent) and Industrials (+7.2 percent) sectors. The S&P 500® Index returned 5.3 percent in the month, bringing the two-month return to 7.1 percent, a strong showing.
Non-U.S. stocks, as measured by the MSCI EAFE Index, had a positive month (+1.8 percent). China led the emerging markets return in the month (+8.4 percent), although year to date China is still negative (-3.1 percent), as is the MSCI Emerging Markets at -0.1 percent.
Fixed income markets
February was another down month for the fixed income markets. The Bloomberg Aggregate Index (-1.4 percent), and long-duration Treasuries were down the most (-2.3 percent). Even shorter-duration Treasuries posted a negative return (-0.4 percent), as did investment-grade credit (-1.4 percent). High-yield bonds posted a modestly positive return (+0.3 percent).
U.S. Treasury Yield Curve
Source: United States Treasury
Looking ahead
With year-end earnings season largely behind us, earnings were positive at 4.0 percent — although sector-by-sector and company-by-company results were more nuanced.
The fourth quarter of 2023 was the second straight quarter of year-over-year earnings growth, which helped boost stocks in February.
Bonds have struggled to digest the recent strong economic data relative to wishful expectations for interest rate cuts. The increase in yields during February took the 10-year Treasury back to levels last seen in the summer/fall of 2023. It seems the market has again adjusted to more of a higher-for-longer mentality, although cuts are still priced in for later in the year.
While incoming data will continue to drive the outcome, the tug-of-war between resilient economic data and rate-cut enthusiasm rages on.
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The information and opinions herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This article and the data and analysis herein is intended for general education only and not as investment advice. It is not intended for use as a basis for investment decisions, nor should it be construed as advice designed to meet the needs of any particular investor. On all matters involving legal interpretations and regulatory issues, investors should consult legal counsel.
