Q1: Stocks Up More Than 10%
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What is the main topic discussed in this episode?
With your money briefing, I'm J.R. Whalen in New York at the Wall Street Journal.
How did January inflation data lift markets and close the quarter?
Some key inflation data pushed stocks higher on Friday. The Dow Jones Industrials rose 211 points to close at 25,928. Meanwhile, the Nasdaq added 60 points. The S&P 500 was up about 19. Shares of Lyft had traded as much as 23 percent higher. in its first day of trading but settled in to close at 8.7% at $78.29 a share. And U.S. oil prices rose to a four-month high of $60 a barrel on Friday. Let's bring in Wall Street Journal markets reporter Akani Ohtani to help us cap off the week and the quarter on Wall Street.
Which major indexes and sectors led the S&P 500's best quarter since 2009?
So Akani, we close out the first quarter with the three indexes turning in strong gains.
That's right. The S&P 500 actually had its best quarter since 2009. So it's quite a remarkable rebound, especially when you consider what happened in the last few months of 2018, when there was a lot of pessimism about global growth and central banks. You know, in the last couple of months in comparison, it seems like a lot of the worries that investors were struggling with at the end of 2018 has somewhat faded to the background.
In fact, the stocks were up more than 10% for the quarter, S&P 500 up about 13%.
Yeah, and it's interesting that we've seen a lot of those gains stemming from all sorts of industries. So whereas at the first half of 2018, we did see a lot of the gains concentrated in tech shares, this quarter, we actually saw all 11 sectors of the S&P 500 and higher. And the last time that that had actually happened was 2014. So really remarkable quarter for the stock market.
And there's some concern going forward as to whether stocks can forge higher in light of slowing global economic growth.
It's one of the big issues that investors are grappling with right now. On the one hand, we have seen signs that central banks around the world are willing to pause on their rate increase campaigns.
What are the risks of slowing global growth versus lower interest rates for stocks?
And that's in light of the slowdown that we've seen in economic growth around the world. And I think at this point, investors are dealing with this sort of tug of war. I mean, On the one hand, lower interest rates should be supportive of market gains. But on the other, slowing growth generally leads to slower profit growth as well. So we'll have to wait to see how those dynamics play out.
Speaking of rates, interesting words out of the White House on Friday. National Economic Council Director Lawrence Kudlow said he'd like to see the Fed drop interest rates by 50 basis points.
Yeah, and it's interesting. We've really seen this administration being quite vocal about the federal rates monetary policy, which is, of course, a shift from prior administrations. But Kudlow is not exactly alone on this. I mean, if you look in the futures market, investors are currently pricing in around a 0% chance of rates going higher this year. And increasingly throughout the last couple of weeks, we've actually seen bets pile into The notion that rates are going to go lower before the end of the year. So it is a little bit unusual, the candor that he has, but not exactly an isolated opinion in the markets.
And the Fed keeps close eyes on inflation, and the latest numbers out for January showed it inched up just 0.1%.
How did White House comments and futures markets shape rate expectations?
Yeah, it really affirms, I think, the notion that inflation is not about to race higher at the moment. I mean, I think this is something that has perplexed investors and economists for quite some time now, the fact that we're seeing a very tight labor market and generally strong economic growth, generally positive consumer sentiment, business confidence growing. And yet inflation has been quite muted. And that's actually a positive for now, I think, for markets, because investors are largely interpreting that as one more reason why the Fed shouldn't accelerate its pace of rate increases. But it does have a flip side. I mean, low inflation has in the past sort of stoked fears of a slowdown in growth.
So it'll be one other thing worth keeping an eye out for.
Many of our listeners are listening to this on Friday afternoon, Friday evening, over the weekend.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:09
2
How did January inflation data lift markets and close the quarter?
0:09–0:46
3
Which major indexes and sectors led the S&P 500's best quarter since 2009?
0:46–2:03
4
What are the risks of slowing global growth versus lower interest rates for stocks?
2:03–3:23
5
How did White House comments and futures markets shape rate expectations?
3:23–4:28
6
Why did Lyft's IPO performance matter for the broader IPO and tech market?
4:28–5:30
7
What economic releases and corporate earnings should investors watch next week?
5:30–5:51
Speakers
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