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3 Major Trends Driving the Markets in March 2024

Published 2024-03-05, 02:15 a/m
Updated 2022-04-07, 04:55 a/m

March marks notable market trends with Bitcoin's surge and rising Wall Street optimism for U.S. stocks, driven by AI advancements and earnings growth.

From Bitcoin’s (BTC) blistering rally toward new record highs to growing bullishness among Wall Street analysts over U.S. stocks, March is shaping up as a month filled with fascinating market trends for investors to track.

The cryptocurrency space is channeling the euphoric environment of 2021, while significant investment banks are raising their targets for the S&P 500 amid optimism around earnings growth and the AI revolution.

At the same time, a string of high-profile macro data releases and central bank meetings will provide crucial insights into the global economic outlook. These are some of the most compelling market developments investors will watch closely in the coming weeks.

1. Bitcoin Pushing for New Highs as Market Reminiscent of 2021

Bitcoin surged past $65,000 on Monday, rallying to a two-year high as the cryptocurrency extended its blistering 2023 rally. The flagship cryptocurrency climbed as high as $65,537 in early European trading hours and notched a new peak since hitting a record of nearly $69,000 in November 2021.

Bitcoin is already up over 50% year-to-date, with gains accelerating in recent weeks amid surging inflows into U.S.-listed Bitcoin funds. The launch of spot bitcoin exchange-traded funds earlier this year has helped attract new large investors, reigniting enthusiasm around the asset. Net flows into the top 10 U.S. spot bitcoin funds reached $2.17 billion in the week through March 1, data showed, with over half that sum going into the BlackRock (NYSE:BLK) iShares Bitcoin Trust.

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Meanwhile, ether is also trading at two-year highs, gaining around 50% in 2023. According to Brent Donnelly, analyst and president at Spectra Markets,

“We are back to a 2021-style market where everything goes up and everyone is having fun.”

2. Analysts Bullish on SPX, Ray Dalio Says Magnificient Seven Only “a Bit Frothy”

Major Wall Street firms are increasingly bullish on U.S. stocks, with BofA Global Research the latest to raise its year-end target for the S&P 500 index. The bank now sees the benchmark potentially climbing around 5% from current levels to 5,400 by year-end, up from a prior target of 5,000. Other banks, including Barclays (LON:BARC), UBS, and Goldman Sachs (NYSE:GS), are also forecasting that the index will finish 2023 in from 5,200 to 5,400.

The upgraded outlook follows Friday’s fresh record highs for U.S. stocks, driven by a rally in big tech amid sustained enthusiasm around artificial intelligence. BofA expects the equity risk premium to compress this year, reflecting views that earnings growth will prove higher and more predictable. The bank cites factors like the index’s reduced debt levels since the 1980s, lower earnings volatility, and a transition to asset-light business models supporting its upbeat stance.

BofA’s chief U.S. equity strategist, Savita Subramanian, anticipates margin stability will improve as corporations shift from globalization-driven growth to a focus on productivity. While AI and weight-loss drugs like Ozempic will remain catalysts, she expects the market’s leadership to broaden. Passive inflows should also sustain momentum in mega-cap tech stocks. However, Subramanian sees the potential for a 5% pullback in 2024, with such dips historically occurring about three times annually.

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In a LinkedIn post titled “Are We in a Stock Market Bubble?”, billionaire investor Ray Dalio concluded the U.S. market does not appear to be in bubble territory based on criteria like valuation levels, conditions underlying the rally, and investor sentiment. While calling the “Magnificent Seven” tech giants like Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) “a bit frothy,” Dalio assessed their aggregate valuation as “fairly priced” with risks around AI’s disruptive impact.

3. Macro Data to Look Out For in March

A slew of macro data releases and central bank meetings are on tap for investors this week, providing fresh insights on the trajectory of the global economy. All eyes will be on the European Central Bank’s March policy meeting, with markets parsing policymakers’ language amid intensified recession fears and still-elevated inflation in the euro area. Investors will also scrutinize February’s U.S. jobs report on Friday for any signs of cooling in the labor market that could reinforce expectations for an eventual Fed rate cut.

Other key data include China’s trade numbers and inflation figures, which will offer a read on any further improvements in exports and potential deflationary pressures. Global and regional PMI surveys covering manufacturing and services will update business conditions across major economies. The Bank of Canada is expected to stand pat on rates despite inflation moderating below 3% recently.

Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

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This article was originally published on The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.

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