The beginning of 2024 has been a mixed bag for the U.S. market. Positive returns and all-time highs for the S&P 500 and the NASDAQ indices showed promise of an economic upturn, while stalling inflation and a potential rate cut still remain up in the air. Every quarter, our Asset Management & Trust team delivers a Capital Markets Review to help keep you apprised of the latest economic news and trends. You can find key highlights from our Q1 2024 report, as well as the full report below.

Report highlights:

• ECONOMY: The downward inflationary trend experienced throughout 2023 hit a speedbump during Q1 2024. This has led many market participants to wonder if inflation is stalling above the Fed's target inflation rate of 2%. What's more, the original market projected 6 cuts in rates have not only been delayed but have come down to possibly 3 cuts in 2024. This has impacted the trajectory of returns for both equity and fixed income markets.
• EQUITY MARKETS: During the first quarter of 2024, returns for large-cap stocks, as measured by the S&P 500, returned 10.56%, the Mid-Cap 400 returned 9.94%, and small capitalization stocks, as measured by the Russell 2000 Index, returned 5.18%. The S&P 500 and the NASDAQ indices both hit all-time highs during the first quarter. The largest contributors to U.S. equity positive performance during 1Q 2024 were large cap growth and mid cap growth, with YTD returns as of March 31, 2024, of 11.4% and 9.5% respectively.
• FIXED INCOME: As the first quarter began, government bond prices shared the euphoria of positive returns with their equity counterparts. After a brief pullback in February, government bonds finished March with modestly positive returns. However, corporate bonds started the quarter down and ended March briefly recovering the quarter's losses. It was no surprise to see credit pull back after the year-end Santa Claus rally in 2023.
• ASSET ALLOCATION: The first quarter of 2024 produced generally positive returns for most "risk assets" across the board. Expectations of lower interest rates in the future, above average corporate earnings, improving investor sentiment and a steady labor market helped fuel a bullish mood. With respect to asset allocation, our portfolios are broadly diversified with exposure to both domestic and international equities; both growth and value issues; and both large and smaller companies. Within the fixed income space, we prefer government and agency notes with shorter-term maturities, while select intermediate term municipals in the 10-15-year range continue to offer attractive taxable-equivalent yields.

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This review is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the review. The review is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.