Stock market today: S&P 500's latest record closes out best first quarter since 2019

With markets closed for the Good Friday holiday, Thursday marks the final trading session of the quarter. It's been a banner one for Wall Street, with all three major averages rising for five straight months. The S&P 500's more than 10% return to start the year marks its best first quarter performance since 2019.

What largely started as a megacap-driven rally has shown signs of broadening. Wall Street firms almost can't keep pace with the S&P's surge and have continued to move up their year-end price targets. And history suggests the momentum could continue.

The S&P 500 (^GSPC) is closing out its best start to the year since 2019, and some indicators are flashing that investor sentiment may be too bullish.

In a research note on Thursday, Citi's equity strategy team noted the Levkovich Index, which uses 11 different inputs to measure investor sentiment, has entered "euphoria" for the first time during this bull market run.

Citi US equity strategist Scott Chronert wrote in a note to clients that the index triggered euphoria after increases in margin debt and short activity in markets, among other factors, pushed the reading higher. Typically, this trigger aligns with a lower probability above historical average returns, per Chronert. But he warned the index was "not designed to be a short-term timing tool.

"A catalyst may still be needed to slow gains," Chronert wrote. "Exhaustion may not be enough."

Chronert told Yahoo Finance that the index is showing sentiment has become far more constructive over recent months amid the rally, and a period of "digestion" for markets could be expected soon.

"You have to acknowledge that you're kind of chasing sentiment," Chronert said. "There is a clear FOMO, fear of missing out, dynamic going on, that we've seen in the flows data. And we're just trying to be a little bit more balanced in how aggressive to be right now."

He added: "It doesn't mean the big story is over. It just means that you have to respect that it does take some time from the fundamentals to grow into the price action."

RH (RH) stock rallied as much as 17% after the company's forecast impressed investors, despite its fourth quarter earnings coming in shy of expectations.

RH expects revenue growth "north of 8%-10%" in 2024 after a 15% drop in 2023. The company said in a letter to shareholders that demand growth is expected to rise 12%-14% this year.

In its fourth quarter, the luxury retailer reported revenue of $738.3 million, which fell shy of estimates for $777.4 million. Margins also fell as the company was anticipating demand to recover. Operating margin landed at 8.7% in the quarter, and adjusted earnings per share slipped to $0.72, which was below expectations for $1.67 per share.

"We think RH's FY'24 rev guide is better than expected and demand trends are above," Curtis Nagle, analyst at Bank of America, wrote in a note to clients following the results. Nagle raised his price target to $375 from $360 and maintained a Buy rating on the stock.

"As the market continues to seek opportunities to express a constructive view on a potential housing recovery in the U.S., RH’s better-than-expected top-line outlook in [fiscal year 2024] likely helped overshadow the retailer's [fourth-quarter] revenues and margins being below its guidance and consensus expectations," UBS analyst Michael Lasser wrote in a note to clients.

The retailer has been in the process of revamping itself as consumers face higher interest rates and have weaker appetite for housing-related spending.

"We have spent the past eighteen months destroying the former version of ourself and are in the process of unleashing what we believe is an exponentially more inspiring and disruptive RH brand, inclusive of the most prolific product transformation and platform expansion in the history of our industry," wrote RH CEO Gary Friedman.

Mortgage rates dipped slightly this week but remain close to 7%.

Yahoo Finance's Rebecca Chen reports:

The average rate for 30-year mortgages remained below the 7% mark but not by much, settling at 6.91% on Thursday, according to Mortgage News Daily.

Another measurement tracking weekly average rates for the 30-year loan inched down to 6.79% from 6.87% a week prior, according to Freddie Mac.

But homebuyers largely dismissed this week’s minor drop as they wait for the Federal Reserve to cut rates, a good possibility at the central bank’s June meeting. Not only would financing be cheaper, but more sellers could be prompted to list their homes — a dual benefit for those who have been sidelined by affordability challenges.

“Purchase applications were essentially unchanged, as homebuyers continue to hold out for lower mortgage rates and for more listings to hit the market,” said Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association.

Consumers are feeling increasingly confident that inflation will continue falling.

On Thursday, the latest University of Michigan survey showed consumers expect inflation to fall to 2.9% in the next year, down from expectations of 3% seen during February. Expectations for long-run inflation were 2.8%, down from the 2.9% seen a month prior.

The one-year inflation projections are in a range seen in 2018 and 2019, before the fallout from the pandemic in 2020 sent inflation to a 40-year high.

"Consumers exhibited confidence that inflation will continue to soften," Survey of Consumers director Joanne Hsu said in a release.

The data comes as the overall picture for price declines has become murkier to start 2024. Both the January and February readings of the Consumer Price Index (CPI) came in higher than economists expected. This has sparked worries on Wall Street that inflation's decline could be bumpier than anticipated.

Last week, Federal Reserve Chair Jerome Powell noted the central bank wants "greater confidence" in inflation's decline before cutting interest rates.

But Powell added, “[The January and February inflation readings] haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes-bumpy road toward 2%. I don't think that story has changed."

The next reading on inflation will come Friday morning with the release of the Personal Consumption Expenditures (PCE) index for February. Economists expect the Fed's preferred inflation gauge, core PCE — which strips out the volatile food and energy categories — increased 2.8% year over year in February. A print in line with expectations would leave annual core inflation unchanged from January's reading.

On a month-to-month basis, expectations are for core prices to have increased 0.3%, which Powell noted isn't "terribly high."

Nikola (NKLA)

Nikola shares soared on Thursday after the maker of trucks powered by battery and hydrogen fuel cells unveiled plans for the first commercial hydrogen fueling station in Alberta, Canada.

"This initiative will look to propel Western Canada towards a cleaner, hydrogen-driven transportation sector," said Ole Hoefelmann, Nikola's president of Energy.

The company and its partners plan to build a network of refueling stations to support Nikola's hydrogen-fueled heavy trucks.

RH (RH)

Shares of RH — formerly Restoration Hardware — jumped 16% after the high-end home furnishing retailer posted a fourth quarter net income of $11.4 million. The company said it faced the "most challenging housing market in 3 decades."

RH expects business conditions to remain challenging until interest rates ease and the housing market begins to rebound. The company anticipates customer demand will pick up throughout fiscal 2024.

Walgreens Boots Alliance (WBA)

Walgreens stock popped more than 1% on Thursday after the pharmacy chain posted $37.05 billion in revenue for its fiscal second quarter, beating expectations of $35.86 billion.

The company also reported a net loss of $6 billion due to the decline in the value of its investment in VillageMD. Citing a challenging retail environment, Walgreens narrowed its 2024 earnings outlook.

FTX co-founder Sam Bankman-Fried was sentenced to 25 years in prison after being convicted of defrauding his customers, investors, and lenders. The sentence was announced by Manhattan federal Judge Lewis Kaplan, who presided over Bankman-Fried's trial.

The entrepreneur who presided over the largest crypto collapse in history had faced up to 110 years behind bars. Prosecutors had requested a sentence of 40 to 50 years, while Bankman-Fried's lawyers asked for six and a half years.

Bankman-Fried addressed the court before sentencing and said he was "sorry about what happened."

Bitcoin (BTC-USD) rose back above $71,000 on Thursday. The cryptocurrency has rallied this week as money flowed into spot bitcoin exchange-traded funds.

Bitcoin was trading up more than 3% to hover near $71,250 as of 11:30 Eastern.

The cryptocurrency hit an all-time high of over $73,000 on March 14 and fell to around $61,000 last week.

Contract signings for existing homes are starting to show some signs of recovery.

Pending home sales grew 1.6% in February from the previous month, according to new data from the National Association of Realtors. The 75.6 index reading is the biggest month-over-month gain since last December. An index level of 100 is equal to the pace of contract activity in 2001.

The gain in the index, a leading indicator to assess the housing market’s health, shows how a pickup in inventory is boosting the market as high rates continue to keep both buyers and sellers on the sidelines, and leaving pending sales down in the resale market by 7.0% annually.

Mortgage rates hovered over 7% every day around mid-February, turning off rate-sensitive buyers.

“While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year,” said NAR chief economist Lawrence Yun in a press release. “Ongoing job gains are clearly increasing demand along with more inventory.”

He added: “There will be a steady rise in inventory from recent growth in homebuilding. Additionally, many sellers who delayed listing in the past two years will begin to put their homes on the market to move to a different home that better fits their new life circumstances — such as changes in family composition, jobs, commuting patterns, and retirees wanting to be closer to their grandkids.”

Regionally, contract signings in the Northeast fell 0.3% from last month, while the West recorded a monthly dip of 6.5% in February. Meanwhile, the Midwest saw a 10.6% gain in transactions with sales under contract, while the South rose 1.1% in February.

“The high-cost regions in the Northeast and West experienced pullbacks due to affordability challenges,” Yun said. “Home prices rising faster than income growth is not healthy and adds challenges for first-time buyers.”

Tesla shares were down almost 2% on Thursday morning, snapping three consecutive days of gains.

The electric vehicle maker has been the worst performer this quarter out of the Magnificent Seven stocks, down roughly 28% since the start of the year. However, the stock had gained during the last three sessions. For the week, Tesla is up roughly 5%.

This week several Wall Street analysts lowered their price target on the stock ahead of the EV maker's delivery report due sometime next week.

AMC (AMC) shares tanked roughly 12% on Thursday morning after the theater chain announced an equity distribution agreement which allows the company to sell up to $250 million of its common stock.

AMC said it intends to use any proceeds to bolster its liquidity and pay or refinance debt, among other purposes.

Last month CEO Adam Aron said he would cut his compensation after the company posted its latest quarterly results.

"I share in your frustration. I feel your pain, and I'm heavily incentivized to get the value of your AMC shares back on the right track," Aron said during the company's earnings call in late February.

Stocks held steady at the open on Thursday morning as markets were set to round out their best quarter first quarter in five years.

The S&P 500 (^GSPC), the blue-chip Dow Jones Industrial Average (^DJI), and the tech-heavy Nasdaq Composite (^IXIC) all hovered around the flatline at the start of the last trading session of the month. With markets closed for the Good Friday holiday, Thursday will mark the final trading session of the quarter too.

The S&P and Nasdaq are up roughly 10% since the start of 2024.

A final reading on fourth quarter GDP released on Thursday morning showed the economy grew at a rate of 3.4% versus a prior estimate of 3.2%. On the employment front, initial jobless claims for last week came in at 210,000 versus estimates for 212,000.

March has been a solid month for the S&P 500 (^GSPC) — and an even better one for oil- and gas-related stocks.

As the month draws to a close, energy has emerged as the top-performing sector. The S&P 500 Energy Select ETF (XLE), which includes oil giants like ExxonMobil (XOM), Chevron (CVX), and ConocoPhillips (COP), has gained more than 9% compared to the benchmark index's rise of nearly 3% in the same period.

Read more here:

Yahoo Finance just dropped its latest Lead This Way episode with General Motors (GM) longtime chair and CEO Mary Barra. Watch the full episode here.

It was really a great treat for me to spend a day with Barra touring an EV manufacturing facility in Detroit. The complexity of making electric vehicles at scale is something I don’t think most auto investors appreciate (which explains why Fisker is probably going out of business and Lucid just needed a capital infusion) — I know I didn’t fully grasp it.

A couple of takeaways from my time with Mary:

• It’s not easy for a legacy automaker to suddenly make lots of electric cars! In part, this is why the Big Three have been under-earning during the EV transition the past few years.

• It’s worthwhile to spend some time on Yahoo Finance and study the valuation on GM. You can do that here. A basic numbers crunch suggests the stock is simply too cheap, provided more EV curveballs aren’t thrown the way of the auto industry.

• Mary Barra remains the right leader for this pivotal time for GM. I don’t envision her leaving anytime soon, and that’s a good thing.