Broadening US market rally gets boost from dovish Fed

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Watch onNEW YORK - A reassuring economic outlook and dovish signals from the Federal Reserve are encouraging investors to look beyond the massive growth and technology stocks that have fueled the U.S. stock market’s gains over the past year.

Investors in the coming week will be watching Friday's personal consumption expenditures price index that will offer the latest read on inflation. The end of the first quarter also could prompt volatility as fund managers adjust their portfolios. More broadly, the Magnificent Seven - Apple, Nvidia, Alphabet, Tesla, Microsoft, Meta Platforms and Amazon.com - have been responsible for 40% of the S&P 500’s gain as of Thursday, according to S&P Dow Jones Indices. That compares with a share of over 60% last year.

Enthusiasm over artificial intelligence has helped fuel a 90% gain in shares of Nvidia so far this year, while Microsoft has gained 14.5%. On the other side of the ledger, Apple and Tesla are down about 11% and 32%, respectively, for the year. Some corners of the market, such as small caps, still look subdued. The Russell 2000, which is focused on smaller companies, is up just 2.2% year-to-date.

The broadening trend could take a hit if the economy begins floundering or runs too hot, upsetting the so-called Goldilocks narrative that has supported markets in recent months.

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Broadening US market rally gets boost from dovish FedA reassuring economic outlook and dovish signals from the Federal Reserve are encouraging investors to look beyond the massive growth and technology stocks...
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