Private Client Group

April 3rd, 2024

What’s Next In The Market: Market Optimism, Supply Chain Shifts, And Gas Price Surges

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In today’s Steady Investor, we look at key factors that we believe are currently impacting market volatility and what could be next such as:

• The S&P 500 is poised for the best Q1 since 2019
• Bridge collapse resets U.S. supply chains
• Gasoline prices are rising faster this year

The S&P 500 Poised for Its Best Q1 in Years – Many investors entered 2024 wondering if the strong rally that started in October could continue. It did. The S&P 500 is poised to deliver its strongest first quarter in five years, with approximately 10% gains notched in the first three months. As we write, the index has reached 21 new all-time highs, and 10 of the 11 S&P 500 sectors have posted positive returns for the quarter. That marks a significant departure from what investors experienced in 2023, when mega-cap tech stocks were driving a lion’s share of the overall index’s gains. In this rally, small-cap stocks have also gained some ground, with the Russell 2000 index up over 4% for the quarter. Small-cap value stocks have also pushed higher than their growth counterparts, which in our view signals an overall expansion in the breadth of the bull market.1

How to Overcome Investor Bias in Today’s Market!

In an unpredictable market environment, investors often exhibit various biases, including the fear of loss, which impacts their decision-making.

Recognizing these biases is crucial. Discover actionable insights in our complimentary guide, Three Steps to Combat Investment Behavioral Bias2, where you’ll uncover strategies to:

• Recognize your own investing biases
• Re-examine your portfolio
• Take key steps to avoid bias

If you have $500,000 or more to invest, download our guide Three Steps to Overcoming Investment Behavioral Bias.2 Simply click on the link below to get your copy today!

Download Zacks Guide, Three Steps to Overcoming Investment Behavioral Bias2

Cargo Ship Crashes into Baltimore Bridge, Taking Port Offline – In a tragic accident that was tied to a systems failure, a cargo ship crashed into the Francis Scott Key Bridge in Baltimore. This incident has effectively closed the Port of Baltimore, which plays an important role in U.S. trade. Many investors see this story and wonder if snarled supply chains could mean fresh price pressures. It’s true that the Port of Baltimore handles key imports and exports that range from autos, light trucks, coal, salt, and sugar, which is likely to result in cost increases for most parties in the supply chain. About 27% of all U.S. coal exports pass through Baltimore, for instance. But it is also important to note that supply chains can quickly adjust with other nearby ports handling much of the ship traffic. Already, the Port of Virginia has indicated ample capacity to absorb a surge in container traffic, and port officials from New York to Georgia have reached out to handle Baltimore-bound cargo. We would not expect to see any material inflation impact as a result of the port closure, even as more time passes to get it back online.3

Gas Prices on the Rise Again – In any given year, gas prices tend to rise in the spring as more drivers get back on the roads for trips, and also as refiners shift to summer gas blends that are less polluting. But 2024 has been a bit of a different story, with the average price of unleaded gasoline up 14% since the start of the year. There have been a few factors at work. First, OPEC+ production cuts and other supply constraints have pushed up the price of benchmark U.S. crude oil by nearly 15% this year. Second, U.S. refineries in the Midwest and South have experienced several disruptions due largely to winter storms, with refinery utilization plummeting under 80% at one point in February – the lowest level since the pandemic. And finally, several key refineries in Russia have been damaged in the war, which has resulted in the need for repairs and curbed exports, ultimately putting downward pressure on global supply. At the end of the day, gas prices are notoriously volatile, which is a key reason the Federal Reserve tends to exclude it when establishing policy decisions. Perhaps the biggest area where gas prices matter is in consumer sentiment, as gas prices can be a constant reminder of economic pressures.4

Three Steps to Overcoming Investor Bias – News and headlines may cause you to worry about what’s next for the market, but we recommend making decisions based on data, instead of emotional attachment.

To effectively counter investor bias, it’s essential to grasp its influence on your decision-making. Our educational guide, Three Steps to Overcoming Investment Behavioral Bias5, is designed to help you become aware of your own biases, and overcome them. You’ll learn:

• The two main types of biases that affect investors: Cognitive and Emotional
• Specific examples of biased decision-making that can negatively impact your portfolio
• Three essential actions you can take to counteract the natural investor tendencies toward bias

If you have $500,000 or more to invest and are ready to learn more, click on the link below to get your copy today!

Disclosure

1 Wall Street Journal. March 28, 2024. https://www.wsj.com/finance/stocks/the-s-p-500-is-poised-for-best-start-to-year-since-2019-0ffbf02a?mod=djemMoneyBeat_us

2 Zacks Investment Management reserves the right to amend the terms or rescind the free Three Steps to Overcoming Investment Behavioral Bias offer at any time and for any reason at its discretion.

3 Wall Street Journal. March 27, 2024. https://www.wsj.com/articles/bridge-collapse-sends-exporters-retailers-moving-to-contain-business-fallout-719734a2

4 Wall Street Journal. March 28, 2024. https://www.wsj.com/finance/commodities-futures/gas-prices-rising-2024-cause-86b864d7?mod=hp_lead_pos3

5 Zacks Investment Management reserves the right to amend the terms or rescind the free Three Steps to Overcoming Investment Behavioral Bias offer at any time and for any reason at its discretion.

DISCLOSURE

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable.

Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.

It is not possible to invest directly in an index. Investors pursuing a strategy similar to an index may experience higher or lower returns, which will be reduced by fees and expenses.

The ICE U.S. Dollar Index measures the value of the U.S. Dollar against a basket of currencies of the top six trading partners of the United States, as measured in 1973: the Euro zone, Japan, the United Kingdom, Canada, Sweden, and Switzerland. An investor cannot directly invest in an index. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor.

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.
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