Bucking the trend of mediocrity, February 2024 has proven to be a standout month when it comes to stock market performance. The S&P 500 and Nasdaq not only ended in the green, but they also posted their best February performance since 2015! This winning streak, the fourth positive monthly return of major indices in a row, was fueled by bullish earnings and robust economic growth.
From tech titans like META, Amazon, and Nvidia to non-tech companies in the industrial and retail sectors, earnings surpassed expectations, driving the market’s strong performance. Let’s not forget that the US economy added 353,000 jobs in January, outperforming twice the forecasted figures.
Optimism is brewing among investors, with UBS and Barclays strategists raising their earnings estimates and S&P Global Research upping its economic growth forecast. Even The Conference Board has dropped its long-standing prediction of a potential recession, although it does foresee a plateau in economic output in the near future.
For March, the market may be quieter due to fewer earnings, but key market dynamics could be shaped by Jerome Powell’s testimony on Capitol Hill and the central bank’s interest rate-driven meeting on March 20.
Given this climate, we want to harness the bullish momentum while preparing for a potential market pullback. In line with this, we maintained equities at 60%, upped technology equity exposure to 27%, reduced bond allocation to 20%, and raised Real Asset allocation to 17%.
In addition, the decreasing risk of recession has prompted us to cut back on defensive sectors (like the energy sector) and ratchet up our investment in the tech sector. We even acquired tech stocks focusing on AI technology for the February rebalance. Rest assured, our holdings still meet our stringent technical and fundamental criteria.
In conclusion, the fortuitous uplift in market performance during February 2024 underscores a pivotal shift in investor sentiment and economic prospects. With strategic adjustments to our portfolios to lean into the tech-driven rally and mitigate risks, we’re positioned to capture the momentum while safeguarding against volatility. Our adaptive strategies, underscored by a keen focus on AI technology and a balanced asset allocation, reflect our unwavering commitment to maximizing returns for our clients. The path ahead seems promising, yet unpredictable forces loom. Armed with data, insight, and a vigilant eye on market indicators, we remain prepared to navigate the complexities of the financial landscape, always striving for excellence in investment outcomes.
