Market Searching for Direction

An abundance of conflicting data and opinions has the market looking for direction early in 2024.

Soon, we’ll start to hear about the annual January Barometer.  Meaning, as January goes so does the stock market 75% of the time.  Since 1945 when the market finished higher at the end of January, the year was positive.

With so much data forthcoming, I would not place too much credence in how January does finish.

Last week the market reversed some of the prior week’s losses with the Dow higher by .34%, the S&P 500 1.84% and the Nasdaq up 3.09%.  Small Caps bucked the weekly trend, flatlining (.01).

Foreign stocks rose 1.24% and emerging markets fell (.66%).

Year-to-date finds the Dow down (.26%), the S&P 500 up .29%, the Nasdaq down (.26%) and the Russell 2000 down (3.75%).  Foreign stocks are down (.37%), emerging markets (2.51%).  Looking for direction!!!

Week Ahead

This week, December retail sales numbers will be reported along with Housing data including building permits, housing starts and existing home sales.  The continuing strength of the consumer will certainly be debated.

On the earnings front, we are still in the 1st inning as we’ll hear other financial companies report including Morgan Stanley and Goldman Sachs.  The following week is when earnings start to kick in.

The number one debate remains, whether or not the Fed will cut interest rates at its March meeting.  The market still believes so, even after last week’s CPI data came in a little hotter than anticipated.

Personally, I don’t see enough data being reported for the Fed to cut in the 1st quarter of 2024.

Will, when and how much will the Fed cut in 2024?

As always, time will tell!

My “hope” is the Fed cuts 2 or 3 times, later in the year, to normalize short-term rates.  If the Fed cuts much deeper, I’m thinking it will be because the economy slowed faster than anticipated.

We have a long way to go.  I suggest not being overly bullish or bearish about the markets and the economy.  It’s been many years since we worked our way out of a similar inflationary environment.

Maintaining balance and diversity remains a prudent way to invest your hard-earned portfolio assets.

Broker Check Logo