In Markets "In a Nutshell"

Markets “In a Nutshell” for March 11, 2024

Investment Week at a Glance

Stocks finished lower for the week.  The Dow Jones Industrial Average fell 0.9%, the S&P 500 was down 0.30%, and the NASDAQ fell 1.20%. Foreign stocks (MSCI EAFE) were up, rising 1.80%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 4.08%.  (Data source: Wall Street Journal)

Unemployment on the Rise

Unemployment rose to its highest level in the past two years hitting 3.9% in February. Jobs gains were strong for February, beating estimates but a revision to January’s number which went from 353,000 down to 229,000 was a cause for higher unemployment. Wage growth also slowed down from 4.5% year-over-year to 4.3%. Although these numbers show some weakness in the labor market, it is a good sign on the inflation front. Job openings are also on the decline as the estimated number is 8.9 million, a steep decline from the 12.2 million we saw in March of 2022. Another data point that could point to a weakening labor market is the quit rate also hit a new recent low. These two data points are typically an indicator for wage growth going forward and point to wages continuing to moderate in the future.

What This Means for the Fed

Fed Chair Jerome Powell had to testify before Congress this past week and in his testimony, he said the Fed is “not far” from having the confidence to begin a rate-cutting cycle. The most recent labor market data also would support this as it looks to be feeling the effect of the rate hikes. Markets have also begun to price in a rate cut in June and three more following by the end of the year. The closer we get to rate cuts the more it seems the Fed has been able to execute their “soft landing” after much worry throughout the rate hikes that we would see a recession. The final test will be if inflation can stay on this downward trajectory during rate cuts because if the Fed were to cut and go back and raise rates markets would most likely struggle and inflation worries would pick back up. That scenario seems very unlikely at this point as the data suggests inflation will continue to come down.



How many times a year does the head of the Federal Reserve testify in front of Congress? (Scroll Down for Answer)

  1.     1
  2.     2
  3.     4
  4.     6


















Answer below.



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2.    2.   The Federal Reserve chair testifies twice a year in front of Congress and gives them a monetary policy report.