Markets “In a Nutshell” for January 16, 2024
Investment Week at a Glance
Stocks finished higher for the week. The Dow Jones Industrial Average rose 0.30%, the S&P 500 was up 1.80%, and the NASDAQ rose 3.10%. Foreign stocks (MSCI EAFE) were down, falling 0.20%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 3.96%. (Data source: Wall Street Journal)
CPI Ticks Up
The December CPI report came out last week and came in at 3.4%, an increase from last month’s reading of 3.1%. The main reasons for this increase were shelter and car insurance which increased 20% in the last year, the most since 1976. Used car prices also ticked higher despite expectations of a decline. This report shows that getting to the Fed target of 2% inflation may be harder than initially thought. This may cause the Fed to keep rates where they are for longer to try and push inflation down to 2%. This uncertainty of the timing of the first rate cut may cause some volatility for the market in the short term. The good news is that there is a rate cut on the way unless something drastically changes, and it will give a boost to the economy when it comes.
Earnings Could Boost Market Gains
Earnings season is just kicking off and expectations are that companies will see earnings increase this year after a slowdown last year. Current S&P 500 forward earnings are now above their previous peak showing expectations are that we will see record earnings for the S&P 500 this year. Historically rising profits and a market that is near all-time highs typically is a positive signal for future performance. On Friday the S&P 500 hit a new intraday high on Friday, historically once a market hits its peak after a bear market, the next bear market doesn’t come until 45 months later on average. The market will once again be focused on the Fed and what they decide as far as rates go.
How long did it take for the market to reach its previous bull market high? (Scroll Down for Answer)
Have a Great Week!
4. 24 months. The previous bull market peak was reached on January 3, 2022 and we hit that mark on December 31, 2023. This is 18 months faster than the historical average.