What’s moving the markets?

AI adoption – Potential equalizer in market cap dynamics: The ten largest stocks in the S&P 500 now represent over 30% of the total market capitalization, sparking a debate about whether this concentration threatens long-term market stability or reflects a new era driven by the rise of artificial intelligence.

Some experts argue that while a top-heavy market could be vulnerable if these mega-cap companies face challenges, the widespread adoption of AI might enable smaller companies to enhance efficiencies and achieve significant gains. This shift could lead to a more balanced market composition, as the benefits of AI adoption ripple through the broader economy, allowing other companies to catch up in market cap and potentially stabilize the overall market landscape. 

Inflation update: Inflation continues to make progress as it appears core numbers are steadily cooling. We have been experiencing a lull in the inflation fight as rates had been stubbornly above expectations since October of last year. The resuming decline has brought us closer to the point where Fed officials can realistically begin to lower interest rates. Even so, we still expect no more than one rate cut in 2024, which appears to be the market consensus as well.