First Quarter Checkpoint: 2024 Market Performance Insights
Analysis of Q1 2024’s equity market reveals the stage is likely set for a favorable equities market for the remainder of 2024.
- Markets & Economy
- Equity Insights
- Economic Insights & Trends
- Market Commentary
Key Points
What it is
Our review of Q1 2024’s equity market performance reveals varied growth across sectors and global markets.
Why it matters
Understanding Q1’s market dynamics illuminates the underlying forces at play and offers insight into potential trends for the rest of 2024.
Where it's going
Equities have the potential to thrive in a favorable market environment for the rest of the year.
As we head into the second quarter, it’s time to take a step back and evaluate how the equity markets performed in the first three months of 2024. While the showcased a surge of more than 10%, growth did not spread uniformly across sectors and markets. Let’s take a closer look.
U.S. large-cap indexes had one of their best quarterly returns of the last five years, but non-U.S. developed markets were not as strong. The MSCI EAFE index, which tracks developed markets outside the U.S., posted a modest increase of 5.7% in dollar terms. However, this number only partially captures the underlying strength of these markets. When adjusting for local currency, the return was closer to that of the S&P 500 at 9.6%. This means local equity markets in developed countries outside the U.S. were as robust as the S&P 500, but the strong dollar hurt U.S. investors in this index by about 4%.
Turning to emerging markets, the MSCI index only rose about 2.1%. The main detractor to performance was ongoing challenges in the Chinese equity market. China comprised over a quarter of the index and was down over 2%. On the brighter side, India and Taiwan carried forward their 2023 results into the first quarter of 2024 with positive returns of 6% and 12%.
Shifting our attention back to the U.S. market, the “” have once again come under the spotlight for their outsized impact on overall market performance. While Nvidia and Meta continued their impressive runs in Q1 with returns of 82% and 37% respectively, not all Magnificent 7 stocks performed well. Apple fell 11%, and Tesla fell almost 30%. In a further departure from 2023, the first quarter saw an impressive breadth in positive returns. In the S&P 500, 7 of the 12 sectors had returns of 9% or more, with 383 of the S&P 500 stocks seeing positive returns.
As we turn the page on the first quarter and look ahead to the , we believe the Fed will be successful in managing to a U.S. . With global growth expected to stay positive and central banks in the U.S. and Europe likely to shift toward cutting rates, the stage is set for a favorable market environment for equities.
A soft landing is a slowdown in economic growth that avoids recession. Often, central banks seek to increase interest rates just enough temper high inflation without causing an economic downturn.
The “Magnificent Seven” companies are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla, which drove the sharp rise in U.S. stocks in 2023.
The index, a gauge of the large-cap U.S. equity market, includes 500 companies that represent approximately 80% of the market capitalization of publicly traded U.S. equities.
Main Point
2024’s Opening Act: Market Insights from Q1
As we head into the second quarter, it’s time to take a step back and evaluate how the equity markets performed in the first three months of 2024. While the S&P 500 showcased a surge of more than 10%, growth did not spread uniformly across sectors and markets.
Tactical Shifts for Balanced Growth
Jake Weaver
Head of Equity Index Management
Jake Weaver is the head of equity index management for Northern Trust Asset Management, responsible for the global equity index and tax advantaged equity portfolio management teams. He is also the chair of the Northern Trust Proxy Committee and a member of the Asset Management Risk Committee and Sustainable Investment Council.
Read BioContact Us
Interested in learning more about our expertise and how we can help?
IMPORTANT INFORMATION
Northern Trust Asset Management (NTAM) is composed of Northern Trust Investments, Inc., Northern Trust Global Investments Limited, Northern Trust Fund Managers (Ireland) Limited, Northern Trust Global Investments Japan, K.K., NT Global Advisors, Inc., 50 South Capital Advisors, LLC, Northern Trust Asset Management Australia Pty Ltd, and investment personnel of The Northern Trust Company of Hong Kong Limited and The Northern Trust Company.
Issued in the United Kingdom by Northern Trust Global Investments Limited, issued in the European Economic Association (“EEA”) by Northern Trust Fund Managers (Ireland) Limited, issued in Australia by Northern Trust Asset Management (Australia) Limited (ACN 648 476 019) which holds an Australian Financial Services Licence (License Number: 529895) and is regulated by the Australian Securities and Investments Commission (ASIC), and issued in Hong Kong by The Northern Trust Company of Hong Kong Limited which is regulated by the Hong Kong Securities and Futures Commission.
For Asia-Pacific (APAC) and Europe, Middle East and Africa (EMEA) markets, this information is directed to institutional, professional and wholesale clients or investors only and should not be relied upon by retail clients or investors. This document may not be edited, altered, revised, paraphrased, or otherwise modified without the prior written permission of NTAM. The information is not intended for distribution or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. NTAM may have positions in and may effect transactions in the markets, contracts and related investments different than described in this information. This information is obtained from sources believed to be reliable, its accuracy and completeness are not guaranteed, and is subject to change. Information does not constitute a recommendation of any investment strategy, is not intended as investment advice and does not take into account all the circumstances of each investor.
This report is provided for informational purposes only and is not intended to be, and should not be construed as, an offer, solicitation or recommendation with respect to any transaction and should not be treated as legal advice, investment advice or tax advice. Recipients should not rely upon this information as a substitute for obtaining specific legal or tax advice from their own professional legal or tax advisors. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. Indices and trademarks are the property of their respective owners. Information is subject to change based on market or other conditions.
All securities investing and trading activities risk the loss of capital. Each portfolio is subject to substantial risks including market risks, strategy risks, advisor risk, and risks with respect to its investment in other structures. There can be no assurance that any portfolio investment objectives will be achieved, or that any investment will achieve profits or avoid incurring substantial losses. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Risk controls and models do not promise any level of performance or guarantee against loss of principal. Any discussion of risk management is intended to describe NTAM’s efforts to monitor and manage risk but does not imply low risk.
Past performance is not a guarantee of future results. Performance returns and the principal value of an investment will fluctuate. Performance returns contained herein are subject to revision by NTAM. Comparative indices shown are provided as an indication of the performance of a particular segment of the capital markets and/or alternative strategies in general. Index performance returns do not reflect any management fees, transaction costs or expenses. It is not possible to invest directly in any index. Net performance returns are reduced by investment management fees and other expenses relating to the management of the account. Gross performance returns contained herein include reinvestment of dividends and other earnings, transaction costs, and all fees and expenses other than investment management fees, unless indicated otherwise. For U.S. NTI prospects or clients, please refer to Part 2a of the Form ADV or consult an NTI representative for additional information on fees.
Forward-looking statements and assumptions are NTAM’s current estimates or expectations of future events or future results based upon proprietary research and should not be construed as an estimate or promise of results that a portfolio may achieve. Actual results could differ materially from the results indicated by this information.
Not FDIC insured | May lose value | No bank guarantee