The S&P 500 had another stellar quarterly performance, surging nearly 10.6% in the first quarter, its best start to a year since 2019 and follows an 11.7% gain in the final quarter of 2023. Quite notably, the large cap index has only experienced back-to-back double-digit quarterly gains on five occasions since 1950. Catalysts behind the sustained rally include a stronger-than-expected rise in fourth quarter earnings, broadening interest in artificial intelligence beyond semiconductor chipmakers, continued easing in inflation, and an upward revision to economic (GDP) growth.

The S&P 500 extended March gains during the shortened trading week. Nasdaq stocks saw minor slippage amid weakness in a pair of Magnificent Seven big tech stocks. U.S. markets were closed on Good Friday but the week's main economic highlight, the Personal Consumption Expenditures (PCE) price index, was released that day and its core results served to boost hopes of rate cuts later this year. Core PCE prices (the Fed’s preferred inflation measure) increased 2.8% on a 12-month basis in February, matching forecasts and down from 2.9% in January.

In this commentary you will read how moderate inflation can be a sign of a healthy economy – but too much can also negatively affect your future spending. Read our latest themed commentary to find out how you can build and safeguard a nest egg to protect your future finances from inflation.