The stock market closed out an impressive first quarter on Thursday with a steady performance. Stocks were little unchanged and this muted action came despite a record-setting close for the S&P 500 just a day earlier and an influx of economic news.
Investors appear to be taking a cautious approach after comments from Federal Reserve Governor Christopher Waller. Waller emphasized the need for "at least a couple of months of better inflation data" before considering a rate cut. This stance aligns with recent pronouncements from other Fed officials, dampening hopes for a swift shift in monetary policy.
However, beneath the surface, some trends emerged. The technical indicator, the relative strength index (RSI), remained above 50 for a record 100 straight days, suggesting the current market momentum might not die out anytime soon.
The economic data on Thursday boosted this optimism. Final figures confirmed a healthy 3.4% growth rate for the fourth quarter, and initial jobless claims were slightly lower than expected. Additionally, consumer confidence showed an upward tick, likely fueled by strong stock market performance and hopes of receding inflation.
Despite these positive indicators, investor caution remained evident ahead of the highly anticipated inflation report – the Personal Consumption Expenditures (PCE) price index due on Friday. The PCE report carries significant weight as it contains the Fed's preferred "core" inflation measure. Until then, markets appear to be in a wait-and-see mode.
