Quarterly Commentary & Economic Outlook

April 1, 2024

In the first quarter of 2024, markets shook off concerns over inflation and the Fed’s future rate trajectory to end the month with the best first quarter since 2019.

On March 27th, the S&P 500 logged its 21st record-high close of the year, ending the quarter up with a Total Re-turn of 10.56%.¹ Not all the Magnificent Seven stocks have participated in this rally. Apple shares fell 10.8% this quarter, and Tesla shares declined 29.2% on a Total Return basis.²

For the month of March, the Total Return for S&P MidCap 400® was up 5.6%, outpacing the S&P 500's 3.22% gain. The S&P SmallCap was up 3.24% on a Total Return basis, MSCI EAFE (International stocks) +3.29% on a Net Return basis, MSCI Emerging Markets +2.48% on a Net Return basis, and the bond market as measured by AGG was +0.92% on a Total Return basis.³

The market’s focus during the first quarter remained on the economy, inflation, and the beginning of Federal Reserve’s rate cuts. In February, PCE inflation data showed core PCE inflation increased 2.8% down from 2.9% in January. Current levels of PCE at 0.3% month over month gains are consistent with 3.5% annual inflation, well above the Federal Reserves stated 2% target.⁴

The Federal Reserve’s March meeting confirmed expectations of three 25 basis point rate cuts in 2024.⁵ The question in the market is when the cuts begin. With the recent February inflation data, a June cut is looking less likely than previously expected. The risk is that the Federal Reserve cuts rates too soon and risks inflation popping back up. On the other hand, wait too long and they could cause the economy to fall into recession.

As we look forward to the balance of 2024, we see upside potential for the market from falling inflation, rate cuts later this year, strong consumer spending and labor markets and positive trends in earnings expectations. We will be watching stock valuations, lagged effects from the Federal Reserve’s prior tightening cycle and inflationary trends, including wage growth as potential headwinds.

External sources: S&P Dow Jones Indices¹, LSEG², S&P Dow Jones Indices, MSCI Indices, Bloomberg³, US Bureau of Labor⁴, Federal Reserve Board⁵.

Indicator Outlook
Gross Domestic Product (GDP) Neutral Indicator
Unemployment Positive Indicator
Consumer Price Index (CPI) Neutral Indicator
Fed Policy Negative Indicator
Interest Rates Neutral Indicator
Dollar Strength Neutral Indicator
Market Valuations Positive Indicator
Positive Indicator = Positive Indicator  Neutral Indicator = Neutral Indicator
Negative Indicator = Negative Indicator


Non-deposit investment products available through Members Trust Company are not deposits of or guaranteed by the trust company, a credit union or credit union affiliate, are not insured or guaranteed by the NCUA, FDIC or any other governmental agency and are subject to investment risks including possible loss of the principal amount invested. Members Trust Company, owned and managed by America’s credit unions, is a special purpose federal thrift regulated by the Office of the Comptroller of the Currency. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Past performance is not indicative of future results. This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant. Any opinions expressed are those of the presenter and do not necessarily reflect the position of Members Trust Company. The information above is obtained or compiled from sources we believe to be reliable. We Do Not Guarantee that such information, will be free from errors, omissions, whether human or mechanical, nor do we guarantee their timeliness, accuracy, or completeness.


Routing Number | 271291826