Markets “In A Nutshell” for March 18, 2024

Markets “In a Nutshell” for March 18, 2024

Investment Week at a Glance

Stocks finished lower for the week.  The Dow Jones Industrial Average was flat, the S&P 500 was down 0.10%, and the NASDAQ fell 0.70%. Foreign stocks (MSCI EAFE) were also down, falling 1.00%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.31%.  (Data source: Wall Street Journal)

Rates Rise, Markets Slightly Fall

Markets cooled off last week and the 10-year Treasury rose to 4.31% as a hotter-than-expected PPI (Producer Price Index) at 0.6% month-over-month. The expectation was for the rise to be 0.3%. PPI is a measure of what businesses pay other businesses for their supplies, typically PPI will rise before CPI (Consumer Price Index). Higher energy prices were to blame for a good portion of the rise as oil is now up over 13% for the year and rose almost 4% last week. Although inflation has been able to come down substantially, this data would indicate the fight may not be over, and possibly a further delay of the Fed cutting rates. Currently, expectations are 3 rate cuts with the first coming in June, it is important to remember we started the year with the market pricing in 6-7 rate cuts in 2024.

One Year Since Bank Failures

It has been one year since we saw a few large banks collapse and send the market into a slight panic. The panic was short-lived as it ended up being a few banks that had certain clientele who needed money which caused a liquidity crisis for the few banks that failed. Since then, we have seen interest rates stabilize and markets have been on a tear higher. The S&P 500 is up 29% in the past 12 months, the Dow Jones 20%, and the NASDAQ 36% as tech has continued to lead the way. A lot of investors would not have expected the market to perform this well a year ago when we saw these banks fail. This is the exact reason why timing the market is not easy because typically when fear is at its peak, markets tend to be near a bottom. This coming week the market will be paying attention to the FOMC meeting to see if we have any indication of the first rate cut.

Quiz:

What is the average return for the S&P 500 in election years since 1928? (Scroll Down for Answer)

1.     -3%
2.     4%
3.     7%
4.     11%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer:

4.    11%.   Markets tend to perform well during presidential elections years. 83% of the time the market has given investors a positive return.