The first quarter of 2024 will go down as the best quarter for U.S. stocks since 2019.

Markets can bend and twist reality in very strange ways when they have decided on a direction. Spoiler alert: The direction right now is upward.

The labor market continues to rebalance, but it’s rebalancing too slowly for the Federal Reserve. Then we received fresh data on Tuesday showing inflation just isn’t coming down.

Stop, skip — or something else? As expected, the Federal Reserve left interest rates alone last week after raising rates at its prior 10 meetings.

The consumer price index (CPI) came in at 4.9% year over year in April, just slightly under the 5.0% reading from March. While this is a positive sign, it is still more than double the Fed's target inflation rate of 2%. The Fed may need to see more evidence of inflation slowing before it pauses its rate hike cycle.

Inflation isn’t going anywhere fast: CPI came in at 8.2% in September, down just barely from 8.3% last month. The market’s initial response was dismay, dropping significantly before allying at mid‐day.

The defining event of the week was the consumer price index (CPI) report. The CPI numbers for August came in above expectations and dimmed hopes the economy had moved beyond “peak inflation.”

Last week was up and down as the markets focused on a shred of positive comments from Federal Reserve Vice Chair Lael Brainard on Wednesday. Although she affirmed the Fed’s commitment to lowering inflation, she said at some point the risks between raising rates and damaging the economy would balance out.

Markets were slowed quite a bit last week following the Federal Reserve’s release of minutes from its last meeting. There wasn’t anything super discouraging in them — but there also wasn’t anything overly encouraging either.

Markets have been on a run lately, fueled by hopes the Fed will pause interest rate increases following data economy is slowing. But are these hopes misguided? We take a look at what’s currently driving markets in our latest Weekly Commentary.