Inflation numbers last week pointed in the desired direction, providing hope to investors the Federal Reserve is now done raising rates, and begin reducing rates in 2024.
That was enough to propel both stock and bond markets higher for the week. The small-cap Russell 2000 led the gains, rising 5.42%, followed by the S&P 500, up 2.37%, the Nasdaq 2.24% and the Dow 1.94%.
Foreign stocks joined the party, rising 3.98% and emerging market up 2.63%.
Bonds, as measured by the Bloomberg Barclays US Aggregate Bond Index rose in price by 1.21%. The bond index is back in the positive or 2023, rising .38%.
The yield on the all-important 10-year US Treasury dropped to 4.439%. Just a couple of weeks ago, the yield was threatening to break above 5%.
Reading over the weekend, I found many prognosticators suggesting the S&P is making a run at the all-time high by the end of 2023. The all-time high is 4818.62. The index closed last Friday at 4514.02. That’s an increase of approximately 6.75%.
Markets – Looking Forward to 2024
Market momentum is now positive. The government kicked the can on the spending bill until 2024, seasonality trends look good, interest rates are falling. All good news.
During the shortened Trading week, we’ll hear reports on Existing Home Sales & Leading Indicators (which have pointed down for months). The lone earnings report this week is important. Nvidia will report on Tuesday and is expected to report 16 billion in revenue. It’s no secret, Nvidia alone has been a significant contributor to the stock indexes moving higher.
As we continue down the home stretch, 2024 will be here is a heart-beat!
Investors are believing the Fed will start cutting interest rates by mid-2024. Many investors believe the economy will have a smooth landing with inflation subsiding, rates getting cut, however the economy still growing and corporate profits rising. Let’s root for this type of landing from our sky-high inflation period.
It’s worth noting, next year the US Treasury department will refinance approximately 7 trillion dollars of debt. This is in addition to the new debt needed to finance next year’s annual Federal Deficit. As our debt situation may not be an impediment for economic growth for the next couple of years, the annual rising interest payments will, before too long become front and center. Let’s hope the next administration, whomever they are, will address our debt situation in a responsible manner and not simply keep kicking the can down the road.
Time moves so quickly. The days, weeks and years often seem to escalate in pace. Society moves so fast that sometimes we forget to take a step back and appreciate the goodness life provides. During this special holiday, my hope is that everyone can take a step back, a deep breath, relax, and appreciate the goodness you’ve experienced.