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Market Recap – March 25, 2024

Keel Point

March 25, 2024

The big news last week was the Fed’s positive outlook on declining inflation, stronger economic growth, and projecting three ¼% interest rate cuts in 2024. Financial markets rallied: the Dow Jones and S&P both set new highs on Thursday.

  • S&P 500 stock prices are up 9.74% in 2024 through last Friday’s close, rallying 2.29% after the Fed’s meeting announcement and updated March 2024 Summary of Economic Projections (“SEP”).
  • The 10-year U.S. Treasury yield also settled back to 4.202% after having risen to 4.3% at the end of the prior week.
  • The Fed wasn’t as hawkish as had been expected and based on what Chair Powell said (see below) there is still a good chance that interest rate cuts could begin in June if the recent upturn in core inflation is short-lived.
  • In response to questions about the latest, higher monthly inflation numbers, Fed Chair Powell said that data hasn’t “really changed the overall story, which is that of inflation moving down gradually, on a sometimes-bumpy road, toward 2%.” Continuing, he said: “Now here are some bumps— and the question is ‘are these more than bumps?’ And we can’t know that.”

Less than one year ago the consensus economic growth forecast was for a second-half-2023 recession.  Current consensus is for 2024 GDP growth in the range of 2% – 2.5%.  Stock prices are reflecting this turn-around in growth outlook – with the S&P being up 27% over the past 5 months.

  • When consumption slowed in January/February, it generated concern that households might be succumbing to the burden of higher interest rates. Most of the excess savings accumulated during the pandemic have been spent, and record high rates of credit card debt and delinquencies and auto loans threatened to limit consumption spending.
  • But household spending is being supported by rising employment and wages, higher home equity wealth, and positive stock market performance since last fall.

What to watch this week:  February core PCE inflation reports on Friday, with the last 12 months unchanged from January. Personal income and spending are expected to be up.  Markets are closed on Good Friday, March 29.

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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