All of the major U.S. stock indices are higher at midday on Tuesday, albeit modestly so. Investors are mulling over some fresh economic data in the form of durable goods orders and consumer confidence. Orders for durable goods rebounded in February, up 1.4% on the back of increases in transportation equipment and machinery orders. Turning to consumer confidence, The Conference Board's Consumer Confidence Index for March printed at 104.7 compared to a revised 104.8 in February. But the so-called 'expectations index' dropped to 73.8 from 76.3 a month ago. That suggests that consumers are less optimistic in the short term. Crude oil has turned slightly lower as of midday, while gold is essentially on a flat line.

Small- and mid-cap stocks (SMID) have underperformed large-caps over the past 12 months, but may be in a better position to generate market-beating returns going forward. SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from global events. As well, the prices of SMID stocks generally are lower than the prices of large-caps. As well, there are long stretches in the record books when SMID stocks have outperformed large-caps. That said, SMID stocks can be risky. The standard deviation for monthly returns was 5.7% for SMID stocks over a 2003-2021 test period, versus 4.3% for large-caps. Still, despite the risks, diversified investors look to have exposure to small- and mid-caps based on the long-term performance record.

U.S. markets were mixed on Friday morning, but are still on track for gains for the week. On the earnings front, FedEx (FDX) rose 7% on an earnings beat, while Nike (NKE) was down about 7% on a weak outlook. The Dow was down 0.5%, the S&P 500 fell 0.1% and the Nasdaq gained less than 0.1%. Crude oil traded above $80 per barrel, while gold fell $16 to $2169 per ounce.

The Federal Reserve wrapped up its latest Open Market Committee meeting on Wednesday and, as expected, held the current federal funds rate steady at 5.25%-5.50%. The fed funds rate remains at its highest level since 2000 and is above the long-term average of 4.4%. This is the Fed's plan, of course: keep rates high to push inflation lower. In the meantime, inflation has indeed been on a downward trek. The latest core CPI reading was 3.8%, down from 9.1% in July 2022, and the latest core PCE Price Index reading was 2.8%. Yet despite the progress, both are still well above the Fed's target of 2.0%, and the slope of the downward trajectory has flattened out lately. Those are potential problems for a central bank that watched while inflation got out of hand in 2020-2021 and wants to rebuild its reputation as an effective inflation fighter. After this latest meeting, the Fed released its Summary of Economic Projections, which includes its "dot plot" forecasts of potential rate changes in the coming months. Chairman Powell and his colleagues remain on track with a plan to lower rates three times in 2024 and then potentially another three times in 2025. Ultimately, those moves are going to depend on the pace of decline in the inflation rate and any pronounced upward move in the unemployment rate. The good news is that the Fed is already ahead of the inflation curve, and the current real fed funds rate of 2.6% is above the historical average of 1.6%. Equity investors cheered the Fed's plans on Wednesday, lifting market averages to new all-time highs.

After the heavy-volume, bearish reversal on March 8 for the Nasdaq, Nasdasq 100 (QQQ), semiconductors, and most of the Technology sector, we had some downside follow-through for the first time since this monster rally started in October 2023. The QQQs and the iShares Semiconductor ETF (SOXX) have lost their 21-day exponential moving averages (EMAs) by a minor amount. Still, for more than four months, the 21-day EMA has been quickly recaptured whenever this happened.