February 2024 Market Recap

Share this article

We are excited to share insights from the Wealth Management Investment Strategy Group (ISG).

Equity markets were strong in February – major US, European, and Asian stock indices surged. This was driven by robust US economic data which helped further ease concerns of a hard landing, better-than-expected fourth quarter 2023 earnings across the developed markets, and Chinese authorities increased their focus on capital markets which helped improve sentiment.

Here’s a recap on what happened in the markets.

The markets: equities strong, bonds underperform

US equities continued their positive momentum in February, with the S&P 500 finishing the month up +5.3%. Strong Q4 2023 earnings and robust economic data prompted the market rally. The more resilient US economic growth, better than expected fourth quarter earnings and continued price momentum were key factors contributing to ISG lifting the odds of their good case scenario of the S&P 500 reaching 5,300 by year-end from 20% to 30%.

Global bonds, however, did not perform as well. Strong economic activity, higher-than-expected inflation, and cautious central bankers pushed bond yields higher. The 10-year US Treasury yield rose to 4.25%, from 3.91% in January.

The economy: resilient

The US economy remained resilient through the beginning of the year. The labor market continued to be strong in February, with nonfarm payrolls coming in higher than consensus. The unemployment rate remained at a low 3.9%.

January inflation also surprised to the upside rising more than anticipated, driven by a monthly increase in shelter costs and the other services components. CPI inflation rose 3.1% over the prior year in January, while the Fed’s preferred inflation metric (the Personal Consumption Expenditures index) remains above the Fed’s 2% target. This said, ISG notes recent strength in the economic data was boosted by erratic factors and does not derail the disinflationary process.

Given the resilience in US economic activity, hotter-than-expected inflation data, and recent Fed commentary suggesting patience before cutting rates, ISG has pushed back their expectation for the first rate cut to June (from March as expected at the beginning of the year).

What are we watching over the month ahead?

Global central bank meetings are top-of-mind. The European Central Bank met early in March and kept rates unchanged. The Fed, Swiss National Bank, and the Bank of England will meet this month. ISG expects rates will remain unchanged after these meetings and that central bankers will want to see stronger evidence that inflation is sustainably on track towards their respective target rates. The Bank of Japan is also meeting this month and may decide to end its negative interest rate policy.

This material represents the views of the Investment Strategy Group (ISG) in Goldman Sachs Asset & Wealth Management (AWM) and is not a product of Goldman Sachs Global Investment Research (GIR). It is not research and is not intended as such. The views and opinions expressed by ISG may differ from those expressed by GIR, LP, or other departments or businesses of Goldman Sachs. Past performance is not indicative of future results which may vary.

This material has been approved for issue in the United Kingdom solely for the purposes of Section 21 of the Financial Services and Markets Act 2000 by GSI, Plumtree Court, 25 Shoe Lane, London, EC4A 4AU, United Kingdom; authorised by the Prudential Regulation Authority; and regulated by the Financial Conduct Authority and the Prudential Regulation Authority; by Goldman Sachs Canada, in connection with its distribution in Canada; in the United States by Goldman Sachs & Co. LLC Member FINRA/SIPC; in Hong Kong by Goldman Sachs (Asia) L.L.C.; in Korea by Goldman Sachs (Asia) L.L.C., Seoul Branch; in Japan by Goldman Sachs (Japan) Ltd; in Australia by Goldman Sachs Australia Pty Limited (ACN 092 589 770); in Singapore by Goldman Sachs (Singapore) Pte. (Company Number: 198502165W); in Dubai by Goldman Sachs International, in Germany by Goldman Sachs Bank Europe SE; in Switzerland by Goldman Sachs Bank AG; in Spain by Goldman Sachs Bank Europe SE, Sucursal en España; in Italy by Goldman Sachs Bank Europe SE, Succursale Italia; and in France by Goldman Sachs Bank Europe SE Succursale de Paris.

No part of this material may be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorized agent of the recipient, without Goldman Sachs’ prior written consent. This does not constitute an offer or solicitation with respect to the purchase or sale of any security in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. This material is a solicitation of derivatives business generally, only for the purposes of, and to the extent it would otherwise be subject to, §§ 1.71 and 23.605 of the U.S. Commodity Exchange Act.

© 2024 Goldman Sachs. All rights reserved.

This article is for informational purposes only and is not a substitute for individualized professional advice. Articles on this website were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs Bank USA, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions.