Stock Market Volatility Intensifies as Quarter End Approaches: A Comprehensive Overview

Goldman Sachs predicts pension funds to divest $32 billion in stocks

Stocks surge nearly 10% this quarter, outperforming bonds Amid anticipation of portfolio rebalancing following a significant market rally, stock markets experienced heightened volatility. The S&P 500 saw its earlier gains cut by half, while the Nasdaq 100 reversed its positive performance. Nvidia Corp. ($NVDA) , a major contributor to this year’s market surge, saw a 3% decrease on Wednesday. Meanwhile, Apple Inc. managed to stop its two-day losing streak.

As the quarter concludes, institutional investors reassess their portfolio allocations to adhere to stringent limits on equity and bond distribution, as well as domestic versus international stock balances. With the expectation of another robust quarter for stocks, pension funds are projected to shed around $32 billion in stocks for rebalancing, as estimated by Goldman Sachs Group Inc.($GS) This marks the most significant adjustment since June 2023.

Although estimates on pension fund movements differ across Wall Street, this rebalancing could place additional strain on the market, especially during the low trading volumes typical around the Easter period. Following a 25% increase in the S&P 500 since late October, concerns have been raised about overextended market positions and the potential for short-term profit-taking. Despite the recent surge in US equity valuations, numerous sectors within the S&P 500 remain relatively undervalued compared to their pre-pandemic prices. Currently, only the technology, materials, and industrials sectors are valued higher than their pre-pandemic levels.

Key Corporate Developments:

Merck & Co. ($MRK) has received US approval for a novel treatment for a rare and severe type of high blood pressure, anticipated to be a major success as the company prepares for the decline in sales of its older drugs in the coming years.

Carnival Corp.($CCL) has slightly upgraded its 2024 forecast, buoyed by an unprecedented demand for cruises, although it also mentioned a negative impact from the collapse of the Francis Scott Key Bridge in Baltimore and ongoing challenges due to tensions in the Red Sea region.

Robinhood Markets Inc. ($HOOD) is expanding its offerings by introducing a credit card to US customers, aiming to transform into a more comprehensive financial services entity.

Fisker Inc. ($FSR) has significantly lowered the price of its Ocean SUV, the company’s sole model, in an effort to remain operational amidst challenges.

Gamestop Corp. ($MGE) reported earnings and sales that fell short of analysts’ expectations.

Altimmune Inc. ($ALT) revealed that its investigational weight-loss medication reduced muscle loss in a phase 2 trial, addressing a concern prevalent among obesity treatment developers. The company also terminated a separate drug development initiative focused on hepatitis.