💥 U.S. stocks hit new highs recently, with the S&P 500 hitting a new all-time high on January 29th and the Dow Jones Industrial Average reaching a new record level on January 30th...
Will these trends continue? Find out more in this quick market update from Michael Baum, CFP®, RICP®. ➡️
Welcome to the Monthly Market Update on You and Your Money. Empowering you to Plan Well, Invest Well and Live Well. Joining us today is Michael Baum, vice president and associate financial advisor at Weiss, Hale and Zahansky Strategic Wealth Advisors. Let's get the latest update on the financial markets Mike. Thanks, Wayne. Yeah, U.S. stocks hit new highs this week with the S&P 500 hitting a new all time high on January 29th. And the Dow Jones Industrial Average reaching a new record level on January 30th. This comes after a strong close to 2023 as the market overcame concerns around rising rates and recession fears. In economic news, the preliminary January PMI came in at 50.3, up from 47.9 and indicating expansion. GDP for the fourth quarter also beat expectations at 3.3% growth versus forecasts of 2%. Yesterday, the federal Reserve met and held interest rates steady, but they did signal that rates could fall in the coming months if inflation continues to cool. They've been keeping the benchmark interest rate between 5.25% and 5.5%, the highest level in over two decades since July. The January jobs report won't come out until tomorrow, but economists are predicting that 185,000 jobs were added last month, reflecting a slight slowdown in the labor market. The message for investors on all of this is that markets continue to show resilience supported by a still solid economy and strong corporate earnings. However, valuations are elevated after the recent rally and geopolitical tensions continue to pose a risk. At Weiss, Hale and Zahansky our investment committee continues to see broad diversification as a winning strategy through these potentially volatile times. But it's important to remember there's no one size fits all solution for investing. Your investment strategy ought to be tailored to align with your individual financial objectives Wayne. Mike it seems like every month we've asked the question or brought up the topic about the Fed and rising interest rates. Well, things seem to have stabilized a little bit, and now the buzz is maybe at some point they will be bringing that interest rate back down again. What are your thoughts on that? How effective it will be and when do you think that might happen? Well, it's a great question. And you're right, it has been one of the key factors we've been looking at and talking about. Seemingly every time we come on the show, it's really what's moving markets more than anything else these days. The signals from the Fed continue to be, you know, that they're going to be cautious with actually lowering rates and that will probably see rates remain higher for longer. There had been some hopes, I think it was about 50/50, that there would be a rate cut in March. I think after yesterday's report that's probably looking more unlikely. And the first rate cut may not come until May. And even then, it's going to be dependent on the data. So I think we will still see some rate cuts in 2024, whether that's, you know, in May or into the second half of the year will depend on how the data continues to come in. But I don't think we're going to see five rate cuts across the rest of 2024. I think we'd be lucky to get three. Is the concept that if you lower the interest rate, it might begin to trigger more inflation? Absolutely, Yeah. That's what the Fed is afraid of right now. You know that you know, the stock market's at or near all time highs, like I just said, and the economy has continued chugging along and growing. And, you know, the consumer, by and large, is still feeling pretty good about things. So if inflation or I'm sorry, if interest rates come down, people may be quick to start borrowing again at higher rates and then spending even more and inflation may may kind of come back. So I think they'd really love to see, as bad as it sounds, they'd love to see the economic growth tamp down even further. They'd love to see the job market get a little slower. Those would be signs that, you know, cutting interest rates will will not trigger more rapid inflation. Thanks for listening to You and Your Money. Find even more episodes, videos and other resources at whzwealth.com. Until next time, live well. Weiss, Hale and Zahansky Strategic Wealth Advisors offer securities and advisory services through Commonwealth Financial Network member FINRA/SIPC, a registered investment advisor. Fixed insurance products and services offered through CES Insurance Agency. They practice at 697 Pomfret Street Pomfret Center, Connecticut, 06259. They can be reached by phone at 860-928-2341. Weiss, Hale and Zahansky Strategic Wealth Advisors do not provide legal or tax advice. The tenured financial services team strives to support clients in achieving their financial life goals. For more information regarding wealth management and customized financial planning with Weiss, Hale and Zahansky Strategic Wealth Advisors, please visit www.whzwealth.com.