It’s been a blistering start to the year for the stock market.
The S&P 500, one of the most widely watched stock indexes in the world, has risen more than 10 percent over the first three months of 2024, buoyed by 22 record highs.
Roughly 40 percent of the stocks in the index are trading above where they were 12 months ago. And even when the index has lost ground, it hasn’t been by much, with only three days so far in 2024 in which the S&P 500 has fallen more than 1 percent by the close.
The move has been driven by renewed appetite for stocks. Investors in March poured roughly $50 billion into funds that buy stocks in the United States, according to data from EPFR Global.
A modest rally in January, based on expectations the Federal Reserve would start cutting interest rates this year has given way to more widespread optimism that the central bank could bring inflation down to its target of 2 percent without inflicting too much damage on the economy — the long-hoped-for “soft landing.”
Such exuberance has spread to the riskier corners of financial markets. Bitcoin continues to trade above $70,000, a threshold it reached for the first time this month after regulators made it easier for ordinary investors to buy funds that track the price of the cryptocurrency. At the same time, mergers and takeovers have surged. And in credit markets, where investors finance companies via bonds and loans, the demand to borrow and the desire to lend have swelled — a sign of optimism over the outlook for corporate America.
Even with the Fed contemplating cutting interest rates as many as three times this year, by as much as three-quarters of a percentage point in total, the returns on offer to investors remain well above those found elsewhere around the globe, helping keep money flowing into the United States.
