Markets “In a Nutshell” for January 8, 2024
Investment Week at a Glance
Stocks finished lower for the week. The Dow Jones Industrial Average fell 0.60%, the S&P 500 was down 1.50%, and the NASDAQ fell 3.20%. Foreign stocks (MSCI EAFE) were up, rising 0.20%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.04%. (Data source: Wall Street Journal)
Market Falls to Start 2024
The market moved lower last week as the S&P 500 snapped a nine-week winning streak to end 2023. Yields also moved higher last week, a theme that was avoided during the nine-week rally. The slight dip in the market is nothing too serious as the market can’t always move higher despite the wishes of investors. No major news broke to move markets substantially and some of this volatility could have been caused by some rebalancing to start the year. The two major forces that will dictate market movement in 2024 will be, when the Fed cuts rates, and how the economy is able to hold up in a higher-rate environment.
Labor Market Remains Strong
The jobs number came in stronger than expected once again with 216,000 jobs added in December, bringing unemployment to 3.7%. This number beat expectations as many still wait to see some cracks in the labor market due to the Fed raising rates over the last two years. Wage growth also came in higher than expected, and while that sounds good for the consumer, it does pose a threat to inflation moving lower. The market is hoping that we can find a sweet spot where we don’t see too much weakness in the labor market but at the same time see inflation continue to move lower to the 2% goal of the Fed.
When does the market expect the first rate cut to come? (Scroll Down for Answer)
Have a Great Week!
1. March. The market has expectations of the Fed cutting rates at the March meeting. Although the Fed has said rate hikes are over, a March rate cut may be a little too optimistic for the market.