Markets “In A Nutshell” for June 17, 2024

Markets “In a Nutshell” for June 17, 2024

Investment Week at a Glance

Stocks finished mixed for the week. The Dow Jones Industrial Average fell 0.50%, the S&P 500 was up 1.60%, and the NASDAQ rose 3.20%. Foreign stocks (MSCI EAFE) were down, falling 1.40%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 4.21%.  (Data source: Wall Street Journal)

Fed Leaves Rates Unchanged

The June FOMC meeting was held last week and as expected the Fed left rates unchanged once again. The rate remained at 5.25% – 5.50% and the Fed is now projecting one rate cut this year. However, their long-term projections have remained the same as they project a 3.1% rate by 2026, which was the same projection they gave in March despite them also projecting 3 rate cuts in 2024. This shows although the Fed is unsure when rate cuts will come, it does show they are still confident in their end goal of rates moving substantially lower in the next 12-36 months. If their expectations come true, stocks and bonds could do well during that time as both tend to perform strong when rates are declining. You will also see savings accounts, CDs, and money market funds begin to pay less as rates decline. This tends to drive down savings rates as there is not much benefit compared to now when you see 5%+ returns on cash.

CPI & PPI Come in Lower than Expected

Inflation numbers for May came in last week and both Consumer Price Index (CPI) & Producer Price Index (PPI), came in lower than expectations. CPI came in at 3.3% as we continue to slowly move closer to the 2% target set by the Fed. This decline in CPI was well received by markets and could push the Fed to cut rates soon if we get a few more months of declining inflation. The other good news on inflation is that real-time data is also pointing to prices cooling off. Rents have begun to moderate for the past 6 months now according to Zillow and typically lag CPI data but should begin to show up in the coming months. The inflation worries have slowly become less of a factor in the market as we get closer to bringing it down to normal. The only worry will be once the Fed does cut, will inflation begin to pick back up.

Quiz:

How much is the Dow Jones up for 2024? (Scroll Down for Answer)

1.     2%
2.     9%
3.     14%
4.     18%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer:

1.    2%.  The Dow Jones is up for 2024 by 2%. When looking at the NYSE Composite, which takes into account all stocks on the New York Stock Exchange, that is up 6% for the year. The Dow Jones continues to trail the overall market which has been the case for most of this bull market rally.