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Market Recap – February 19, 2024

Keel Point

February 19, 2024

Top on the list of investor concerns in 2024 is the presidential election, followed by inflation, recession, interest rates and their combined impact on the stock market.  After the CPI/PPI surprises this week, the S&P 500 closed down 0.42% for the week, still up 5.54% for the year. 

  • News about the economy remains positive, even as the January CPI and Producer Price (PPI) inflation measures didn’t decline as hoped. The twelve-month core CPI was unchanged at 3.9% and PPI unchanged at 2.6%, but notably monthly core PPI was up 0.6% vs 0.2% in December.
  • The Fed’s preferred inflation metric – core Personal Consumption Expenditures inflation – has annualized at 1.9% over the past seven months, likely will report at 2.7% y/y for January but its 3-month and 6-month annualized rates are likely to rise to 2.3%. The good news is that core PCE inflation remains on track to reach 2.2% in May.   Fed officials have repeated that they will begin loosening policy before the PCE measure returns to target, so there is still a good chance of a May Fed rate cut, but financial markets have become skittish about it.
  • Consumer spending appears to have declined in January and is likely to slow further to an annualized rate of 2% in the first quarter which suggests that GDP will also slow and not create higher inflation pressures. The outlook is for slower but positive GDP this year and 10+% growth in earnings per share.

News about the November 2024 elections changes daily, even with the presumptive presidential candidates already identified. 

  • As much as it is a top concern in financial markets, stock markets continue to rise regardless of who occupies the White House. (More in an upcoming Keel Point blog post.)
  • While elections do have an impact on taxes, spending and regulation, a President is limited by what Congress will approve or not block.
  • Republican candidate Trump campaigned in 2016 on cutting taxes, which he did in 2017, and Democrat candidate Biden campaigned in 2020 on raising them, which Congress blocked.

 

 

 

Disclosure:  Securities offered through Keel Point Capital, LLC, Member FINRA and SIPC.  Brokerage and Investment Advisory Services are offered under the Keel Point brand. Investment Advisory Services offered by Keel Point, LLC, an affiliate of Keel Point Capital, LLC. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients.

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