In Markets "In a Nutshell"

Markets “In a Nutshell” for January 29, 2024

Investment Week at a Glance

Stocks finished higher for the week.  The Dow Jones Industrial Average rose 0.60%, the S&P 500 was up 1.10%, and the NASDAQ rose 0.90%. Foreign stocks (MSCI EAFE) were also up, rising 1.50%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.14%.  (Data source: Wall Street Journal)

GDP Growth Beats Expectations

Fourth-quarter GDP growth came in at 3.3%, much higher than the expected number of 2%. The main component of the US GDP is consumption, making up roughly 70% each year. Once again, the consumer was able to stay strong as consumption grew by 2.8% which supports that the consumer is in a good position with the unemployment rate near all-time low levels despite the rise in rates.  This makes it 6 straight quarters where GDP growth has exceeded 2% which shows the economy is in a strong position right now as we are above historical growth rates. Expectations are the economy will cool off a bit in the coming quarters but never see negative growth. Once the Fed cuts rates, the economy is expected to get a boost and gain more steam.

Data Supports “Goldilocks” Narrative

With the recent data of economic growth and the US at full employment, the Fed has seemed to have its “soft landing” as they get ready to cut rates sometime this year. Inflation continues to come down as core PCE (personal consumption expenditures) came in below 3% for the first time since 2021. This is one of the numbers the Fed likes to pay attention to when looking at inflation and when they can begin to cut rates. The Fed has its first meeting of the year this week and is the main event for investors this week as they could indicate when they might begin to cut rates. No rate cut is expected this week but depending on what Fed Chair Powell says, it might move the market in one direction or the other.

Quiz:

Quiz

How many meetings does the FOMC hold a year? (Scroll Down for Answer)

    1.     12
    2.     8
    3.     6
    4.     4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

Answer:

2.    8.  The Fed meets 8 times a year to review economic and financial conditions and determine the monetary policy.