S&P 500 and Nasdaq Advance to Kick Off Second Quarter, Gold Trades at New Record High

Barry Adams
01 Apr, 2024
New York City

Benchmark stock indexes edged higher in early trading after investors reacted for the first time to the release of an alternative measure of inflation on Friday. 

The U.S. Personal Consumption Expenditures Price Index in February and the alternative measure of inflation watched by the Federal Reserve rose less than expected. 

The latest update on the index was released on Friday, and U.S. investors reacted to the data after trading resumed following the Good Friday holiday. 

The PCE price index rose 2.5% from a year ago and advanced 0.3% from the previous month, the U.S. Bureau of Economic Analysis reported Friday. 

The index accelerated to an annual rate of 2.5% from 2.4% and slowed to 0.3% monthly from 1.0% in the previous month, respectively. 

The core rate, which excludes volatile food and energy prices, rose at a slower pace of 2.8% from the 2.9% rate in January. 

The widely followed indexes advanced in the first quarter, and the S&P 500 index gained 10.2%, its best quarterly performance in five years. 

The Nasdaq Composite advanced 9.1%, and the Dow Jones Industrial Average added 5.6%. 

Investors have been bidding up stocks in the hopes that central banks around the world are laying the groundwork for possible rate cuts in the second half as inflation continues to soften.

A week ago, the US, the UK, and Norway held their policy rates, but Switzerland bucked the trend and led other central banks by lowering rates by 25 basis points.

This week investors are looking ahead to the release of the Job Openings and Labor Turnover Survey report on Tuesday, the ADP’s private sector employment update on Wednesday, and the nonfarm payrolls report on Friday.

The construction spending report for February is scheduled to be released later today. 

 

U.S. Indexes and Yields

The S&P 500 index increased 0.08% to 5,269.37, and the Nasdaq Composite rose 0.36% to 16,441.28. 

The yield on 2-year Treasury notes increased to 4.62%, 10-year Treasury notes inched down to 4.21%, and 30-year Treasury bonds edged up to 4.37%.

WTI crude oil increased $0.22 to $82.90 a barrel, and natural gas prices decreased 1 cent to $1.74 a thermal unit.

Gold jumped to a record high on the hopes that the U.S. Federal Reserve is more likely to lower interest rates after the release of the weaker-than-expected PCE Price Index. 

Moreover, elevated geopolitical tensions in the Middle East and the ongoing war in Ukraine contributed to market anxieties.

Gold increased by $14.94 to $2,247.51 an ounce, and silver rose 4 cents to $25.01. 

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 104.53.