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CNN —
After a stormy 2022, US stocks gained during the first quarter of 2023 in a surprise show of resilience despite a banking crisis, cryptocurrency meltdowns and uncertainty about what’s ahead for the economy.
What happened: Nothing about the first quarter’s performance was linear.
The broad-based S&P 500 seesawed throughout the quarter, ending January on a high note before tumbling in February, rising again in March and ultimately ending the quarter up about 7%.
The tech-heavy Nasdaq made a remarkable resurgence, soaring nearly 17% in its best quarterly gain since the fourth quarter of 2020.
Some other highlights:
What’s next? Despite the first quarter’s strong performance, investors say that celebrating a Fed victory against inflation would be premature.
Earlier this month, the collapse of three financial institutions — Silicon Valley Bank, Signature Bank and Credit Suisse — set off a banking meltdown that sent markets teetering.
Wall Street largely shrugged it all off, however, with stocks recouping their losses — and then some — as investors started snapping up tech stocks, boosting the broader equity market.
But that doesn’t mean that inflation isn’t still a key factor driving the market.
Here’s what Wall Street experts are saying:
The end of March means that there will be a new month’s worth of economic releases for investors to parse through, starting with a slew of jobs data this coming week.
Why that’s important: Despite Wall Street’s cheery optimism, markets are still looking for clues on how the economy is faring. The Federal Reserve’s job has been made more complicated by the tumult in the financial sector, since it’s unclear whether the cracks in the financial sector will widen. Moreover, the Fed still has yet to beat inflation.
But tamping down inflation is only one part of the Fed’s dual mandate. The central bank’s goal is to achieve price stability while keeping unemployment rates at a minimum.
The labor market has remained red hot, despite the Fed’s aggressive tightening campaign. While that may seem like good news for the Fed, it’s actually a sign that the central bank might have to tighten the economy further. That’s because strong job and wage growth means that companies pass on those higher labor costs to customers by raising prices on their goods and services.
Key reports to follow next week:
Monday: March manufacturing PMI.
Tuesday: February JOLTS report.
Wednesday: ADP private sector employment report.
Thursday: Jobless claims and mortgage rates.
Friday: March jobs report and February consumer credit.
