What to know today

  • Stocks still have springs in their steps.
  • Blessed are the deal-makers.
  • There’s joy in Baltimore.

Small-Caps Surge

It’s been another really good quarter for stocks.

The S&P 500 Index $SPX closed up 44.91 points and 0.86 percent at 5,248.49 on Wednesday, which means that heading into the final trading day of March it’s less than two points away from finishing up a second straight double-digit quarterly gain.

That hasn’t happened in more than 10 years, and it’s only happened five times in the past 50 years.

But look at the Russell 2000 Index $RUT go, rising more than 2 percent. The small-cap-focused index, outperforming the big boys, broke out to a new 52-week high on Wednesday.

This is a rally off cheap valuations supported by a healthy economy and corresponding strong revenue and earnings expectations.

As Gregg Greenberg of Investment News pointed out last Friday, the Russell 2000 has been narrowing a severe underperformance gap against the S&P 500, noting that this narrowing has fund managers thinking about a change of leadership.

Greenberg cited Greg Tuorto of the Goldman Sachs Small Cap Core Equity ETF $GSC, who sees an earnings recovery for the entire market that will be felt most powerfully in the small-cap space.

The Russell 2000 is at a 52-week high and continues to close a performance gap versus the S&P 500.

We’ve identified multiple technical factors that suggest this bull market has plenty of room to run, including data on what happens when November, December, January, February, and March are positive, how the presidential election cycle impacts markets, and recent stuff about back-to-back double-digit up quarters.

And it’s all good.

Here’s another piece of technical trivia to keep in mind today, courtesy of Jeffrey Hirsch of the Stock Trader’s Almanac: When the day before the Good Friday market holiday is the last trading day of the first quarter, it’s generally a boost for the market.

The Dow Jones Industrial Average is up seven out of 10 occurrences, with an average gain of 0.18 percent. The S&P 500 is also up seven out of 10 times, with an average gain of 0.29 percent.

The Nasdaq, meanwhile, is up six of eight times at an average of 0.51 percent, and the Russell 2000 is up six out of seven for an average gain of 0.47 percent.

That’s a pretty friendly trend for this “Fake Friday.”

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Bankers see share issuance activity picking up with rate cuts.

A lot of money is being raised through equity offerings these days, more than during the last few years at least.

According to Dealogic, bankers have closed $143.9 billion of stock sales in 2024, the best first quarter since 2021.

Initial public offering activity is flat compared to last year, however, and about half what it was in 2022 at $22.4 billion.

Activity in the US has been relatively strong, highlighted by high-profile debuts such as Reddit’s $RDDT.

Global bankers are saying “Let’s Make a Deal” amid rising share issuance by public companies.

Incidentally, RDDT took its steepest one-day tumble on Wednesday after short seller Hedgeye Risk Management published a report that said it’s grossly overvalued and should trade closer to its IPO price of $34.

RDDT was down 11.30 percent during regular trading hours to $57.75.

Bankers expect a rate cut by the Federal Reserve to stimulate IPO activity, though the window may be tighter in the second half of the year due to the US presidential election in November.

They also expect healthy issuance by publicly traded companies to continue, as they take advantage of healthy demand in a bull market.

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March 28, 2024

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Rubenstein Is for the Birds

The Baltimore Orioles have a new owner.

They say everyone has hope on Opening Day.

I’d say that’s particularly true in Baltimore this year, where David Rubenstein, the co-founder and former co-chairman of The Carlyle Group, has assumed stewardship of the city’s beloved but for so long benighted baseball franchise just in time for the first pitch of the new season.

“To own the Orioles is a great civic duty,” Rubenstein said in a statement posted by the Orioles’ social media team. The lawyer, businessman, philanthropist, and now professional sports team owner was born and raised in Baltimore.

He closed his statement by saying his eyes are on returning a World Series trophy to his hometown.

Play ball!

Carlyle Group co-founder David Rubenstein is the new owner of the Baltimore Orioles.

So, it’s Opening Day of the 2024 Major League Baseball as well as the last trading day of the first quarter.

We’ll also see the third reading on fourth-quarter and full-year 2023 gross domestic product at 8:30 a.m. this morning from the Bureau of Economic Analysis. Expect little in the way of surprise from that data.

There is more-than-trivial interest in what Japanese officials will do to support the yen, which hit a 34-year low against the US dollar early on Wednesday and has underperformed all the major currencies but the Swiss franc over the past three months.

We’re also heading into an atypical three-day weekend on this “Fake Friday.”

What’s still occupying investors’, traders’, and speculators’ imagination is tomorrow’s 8:30 a.m. ET release of February Personal Consumption Expenditures Price Index data.

And Fed Chair Jerome Powell will be participating in a moderated discussion with Kay Ryssdal of National Public Radio at the Federal Reserve Bank of San Francisco Macroeconomics and Monetary Policy Conference at 11:30 a.m. ET.

Maybe keep an eye on Bitcoin $BTC, which trades 24 hours, seven days a week.

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