Market developments
Equities:
Stocks experienced a slight decline on Friday, halting the week’s rally triggered by the Federal Reserve’s commitment to potential interest rate cuts this year. Despite the day’s decline, the S&P 500 is poised for its most significant weekly gain in 2024, reflecting optimism surrounding the Fed’s intention to guide the economy towards a soft landing. Strategists raised their outlook on U.S. stocks, citing justifications for the recent rally and downplaying concerns of a market bubble. They noted that while inflation remains a risk, it is not yet a significant concern for central banks or markets.
Fixed income:
Leading up to the Fed’s meeting, there were concerns about a potential reduction in interest rate cut forecasts. However, the Fed maintained its previous projections, fueling optimism about continued economic and corporate growth which pushed U.S. treasury yields lower this week. The better-than-expected inflation print in Canada also helped move Canadian treasury yields lower, leading to a strong week for bonds across North America.
Commodities:
Oil prices experienced fluctuations throughout the week, ultimately ending slightly lower on Friday but still managing to secure a small gain for the week. This was influenced by the failure of a United Nations Gaza ceasefire resolution and escalating conflicts between Russia and Ukraine.