Stocks Rally to End Week, Month and Quarter; Bonds Mixed

The Dow (+3.2%), NASDAQ (+3.4%) and NASDAQ (+3.5%) showed strong gains last week to also end the month and quarter.  Meanwhile, taxable bonds were down about 0.5%, but tax-free municipal bonds advanced about 0.2%, extending its gain streak to four consecutive weeks.  The 10-year Treasury yield remained relatively flat at 3.5%.

The only major economic news last week was the release of the Fed’s preferred measure of inflation, PCE (Personal Consumption Expenditures).  The PCE for February came in below estimates, indicating that inflation may be slowing down.  More importantly, this gave investors additional hope that the Fed may pause its rate hiking campaign at its next meeting in May.  Earlier in the week, stocks also rallied as investors seem relieved that the failure of banks does not seem to be wide spread.

Last week also marked the end of March, as well as the end of the first quarter of 2023.  During those periods, we observed a strong rally in technology stocks and extreme volatility in the bond market, as bonds eventually ended up in positive territory.  In the coming week or so, I will be preparing an economic summary and outlook, so stay tuned for that.

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