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.

Christmas came early this year for investors. Colloquially known as a “Santa Claus rally,” the market experienced an upward bounce in the latter half of November. On the equities side, the S&P 500 and Nasdaq saw their best monthly gains (8.9% and 10.7%) since July 2020. Over on the bonds side, U.S. Treasury yields continued to drop and the bond market had its best monthly gain in nearly 40 years.

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.

Hurricane Ian barreled through Florida this week, leaving a wide swath of destruction in its wake. A natural disaster of this magnitude is a negative to markets, and it will still be several days before we see how extensive the fallout will be. It could also take some time to sort out the hurricane’s economic ramifications, including whether they will be short-term and specific to Florida or carry long-term effects for the entire country. Get our thoughts on what the data is saying.

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.