THE WELL-TH NOTES

By 213 Strategic Partners on April 5, 2024

Weekly data-driven insights on the markets and economy

First Week of April 2024

Cooling Down. The S&P 500 fell 0.72% Tuesday to close at 5,205, the Dow Jones fell 1% to 39,170 and the Nasdaq fell 0.95% to finish at 16,240. Sticky inflation data and strong manufacturing data released Monday sent yields higher and reduced the odds of a Fed rate cut in June. The S&P 500 is coming off a 10% gain for the first quarter, its best start to a year since 2019.[i]

Yield Boost. 10-year Treasury yields hit their highest level since November on Tuesday, up 2.6 bps to 4.36%. The 2-year Treasury was down 2.5 bps at 4.69%. The ISM Manufacturing index rose to 50.3, up from 47.8 in February, signaling a strong U.S. economy.[ii]

Inflation Indication. The personal consumption expenditures price index, the Fed’s preferred inflation gauge, rose 2.8% annually in February, up 0.3% from January. Excluding food and energy, core PCE was up 0.3% for the month and 2.5% on the year, compared to the estimated 0.4% and 2.5%. Consumer spending increased 0.8% on the month, well ahead of the 0.5% estimate, and personal income increased 0.3%, slightly below the 0.4% estimate.[iii]

Spring Surge. Gas prices have surged nearly 14%, more than 40 cents per gallon, since the start of the year. Some states have seen prices climb dramatically over the past month. In Utah, the average price of a gallon of gas has increased by 60 cents, while prices have jumped 55 cents in Alaska and 43 cents in Oregon. This follows the trend of the past six years where, excluding a pandemic-related anomaly in 2020, gas prices in the U.S. have risen an average of nearly 50 cents between January 1 and late March.[iv]

Raise the Floor. Fast-food workers in California at chains with more than 60 national locations now earn $20 an hour, above the state’s broader minimum wage of $16 an hour. The average wage for hourly food-service workers in California was $17.89 an hour from October 1 to March 28. The state law passed in September that implements this new pay floor also establishes a 9-person council that will determine future wage hikes and guidelines for labor conditions for the industry.[v]

Credit Spreads. Investors are expected to sustain a rally in the U.S. corporate bond market into the second quarter as they scramble to lock in returns before the Fed cuts rates. Credit spreads, the premium paid by companies over Treasuries, on investment grade rated and junk-rated bonds touched their tightest levels in two years on March 21 – at 91 basis points and 305 basis points, respectively. Investment grade companies raised a record $538 billion in Q1 – that’s 40% of the $1.3 trillion of bond supply that was expected for the entire year.[vi]

AT&T Breach. Information for some 73 million current and former AT&T customers was recently posted on the dark web in a data breach. AT&T said the affected data set appears to be from 2019 or earlier and impacts approximately 7.6 million current customers and approximately 65.4 million former account holders. This issue comes on the heels of the February outage that temporarily knocked out cellphone service for tens of thousands of customers in the U.S.[vii]

Tax Season. Tax season is in full swing, and millions of Americans are filing their taxes before the April 15 deadline. According to a study, 32% of Americans procrastinate filing because they don’t think they’ll get a refund and 25% state the process is too complicated and stressful.[viii] So far this year, the average return issued is $3,145.[ix] Investing time into your tax return could pay off!

[i] Singh, Pia and Lisa Kailai Han, “Dow tumbles nearly 400 points, falling for a second day in rough start to new quarter: Live updates,” CNBC, April 2, 2024, https://www.cnbc.com/2024/04/01/stock-market-today-live-updates.html. Accessed April 3, 2024.

[ii] Singh, Pia and Sam Meredith, “10-year Treasury yield hits highest level since November as bets on June rate cuts cool down,” CNBC, April 2, 2024, https://www.cnbc.com/2024/04/02/us-treasury-yields-in-focus-as-investors-assess-economic-data.html. April 3, 2024.

[iii] Cox, Jeff, “Key Fed inflation gauge rose 2.8% annually in February, as expected,” CNBC, March 29, 2024, https://www.cnbc.com/2024/03/29/pce-inflation-report-february-2024-key-fed-inflation-gauge-rose-2point8percent-annually-as-expected.html. Accessed April 4, 2024.

[iv] Zahn, Max, “Gas prices have climbed nearly 14% this year. Here’s why.,” ABC News, March 29, 2024, https://abcnews.go.com/Business/gas-prices-climbed-14-year/story?id=108652610. Accessed April 4, 2024.

[v] Rogers, Kate and Amelia Lucas, “California fast-food workers are now making $20 an hour. Other businesses might have to catch up,” CNBC, April 1, 2024, https://www.cnbc.com/2024/04/01/california-fast-food-minimum-wage-other-business-may-raise-pay.html. Accessed April 4, 2024.

[vi] Ramakrishnan, Shankar, “Relentless US credit demand seen driving second-quarter rally,” Reuters, April 1, 2024, https://www.reuters.com/markets/rates-bonds/relentless-us-credit-demand-seen-driving-second-quarter-rally-2024-04-01/. Accessed April 4, 2024.

[vii] Barr, Luke and Meredith Deliso, “Data from 73M current, former customers leaked on dark web, AT&T confirms,” ABC News, March 30, 2024, https://abcnews.go.com/Business/att-data-leak-dark-web/story?id=108686296. Accessed April 4, 2024.

[viii] Holzhauer, Brett, “Taxes are due in less than two weeks — here’s how you can get them done quickly,” CNBC Select, May 15, 2023, https://www.cnbc.com/select/file-taxes-fast/. Accessed April 4, 2024.

[ix] Avery, Dan and Jasmin Suknanan, “Here’s when you should expect to receive your tax refund,” CNBC Select, March 19, 2024, https://www.cnbc.com/select/when-to-expect-your-tax-refund-2024/#:~:text=To%20date%2C%20the%20average%20refund%20issued%20in%202024%20is%20%243%2C145. Accessed April 4, 2024.