Springing Forward

March 2024



Time for a quick update on the markets, the U.S. economy and continued improvements in key indicators.

Stocks are more mixed and a bit more volatile lately. The S&P 500 recently posted just its third weekly decline since the late October lows but remains near all-time highs and up nearly 25% without so much as a 5% or more pullback.

In our view, the steep tech-focused rally may be due for a healthy period of consolidation. But with risks to the outlook diminishing, we continue to see the opportunity to add exposure to lagging, economically sensitive segments like mid- and small-cap equities.

Encouragingly, market breadth has been improving. While the S&P 500 and NASDAQ have been busy setting record highs over the past month, smaller-cap stocks and the S&P 500 equal weight index have quietly outperformed.

Recall that we recently recommended increasing mid- and small-cap exposure in portfolios if appropriate per the respective client investment objective.

Note that since the last filming, value stocks and dividend stocks have both shown signs of relative outperformance over the S&P 500. And it's been a while since we could say that. Again, it’s a sign of greater market breadth, which we welcome.

Shifting to bonds, in response to stronger inflation data, the market has adjusted expectations to align with three interest rate cuts in 2024, although the probability of additional tightening has increased, creating a near-term floor on interest rates.

Increased long-term treasury issuance and global influences, such as the Bank of Japan's decision to loosen yield curve control, will affect yield levels and disrupt global asset flows. As a result, we believe interest rates for the 10-year treasury will continue to trade in a range between 4–4.5% over the next six to nine months, which will keep pressure on credit conditions.

While many major fixed income indices are mildly negative in the year to date, investment grade taxable and municipal bonds continue to offer good value. And we are now recommending that investors buy longer maturities.

We currently believe the market is attractive and the competing influences of inflation and growth will create return opportunities throughout 2024.

Recall that last month, I discussed how many of our economic and financial indicators had improved. That trend has continued, specifically in our outlook for consumer sentiment, the labor market, consumer spending and inflation. All have moved into positive outlook territory. Fans of our speedometers will see green for the first time in a while, just in time for spring. The improving indicators have increased our confidence in a soft landing for the economy.

Important Information


The views expressed represent the opinions of City National Rochdale, LLC (CNR) which are subject to change and are not intended as a forecast or guarantee of future results. Stated information is provided for informational purposes only, and should not be perceived as personalized investment, financial, legal or tax advice or a recommendation for any security. It is derived from proprietary and non-proprietary sources which have not been independently verified for accuracy or completeness.


While CNR believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and management's view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions which may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements.


Past performance or performance is no guarantee of future results.


All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market.


City National Rochdale, LLC, is an SEC-registered investment adviser and wholly owned subsidiary of City National Bank. Registration as an investment adviser does not imply any level of skill or expertise. City National Bank and City National Rochdale are subsidiaries of Royal Bank of Canada.


Index Definitions


S&P 500 Index: The Standard & Poor's 500 Index is a market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent US equity performance.


MSCI EAFE Index: The MSCI EAFE (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization weighted index that is designed to measure developed equity market results, excluding the US and Canada.


Bloomberg U.S. Aggregate Index: The Bloomberg US Aggregate Bond Index measures the performance of investment grade, US dollar-denominated, fixed-rate taxable bonds.


Bloomberg Municipal Bond Blend Index: The Bloomberg US Municipal Bond Index measures the performance of investment grade, US dollar-denominated, long-term tax-exempt bonds.

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