Markets Remain Resilient In 2024

As we ended the first quarter of 2024, we saw extremely low volatility in the stock market. At the beginning of the year, markets expected that the Fed would cut rates significantly. As we’ve progressed, we’ve seen persistent economic strength in the labor market, and inflation has not dropped as much as hoped, hovering in the low 3% range.

This has caused the Fed to rethink its approach as it tries to push inflation lower; current expectations are that it will only cut three times this year, compared to seven cuts expected at the beginning of the year. The good news is that the resilient economy, strong earnings, and AI growth have allowed stocks to look through the pressure of higher rates for longer.

Looking at US companies, the S&P has proven to be resilient as the “Magnificent 7” from 2023 has lost some of its luster. While Microsoft and Nvidia have surged, Apple and Tesla have struggled this year, down roughly 11% and 29% respectively in the quarter. Some have said that the concentration of these popular companies in the stock market would cause markets to struggle if those key companies had issues, which has clearly not been the case this year.

As we look towards Q2, we expect Fed policy to remain a market focus. It’s important to recognize that the Fed will eventually cut rates, but the motivation for cuts is based on a slowing economy. The net effect of these forces is complicated to predict, which is why it matters to create a long-term asset allocation and financial plan that sets you up to succeed through various market conditions.

Advisory services offered through National Wealth Management Group, LLC, a Registered Investment Adviser. This information is intended for educational purposes and is not intended as a recommendation to buy or sell securities. Investing involves risk. Before investing, you should consult with a financial advisor to determine how a specific investment strategy fits your personal goals and objectives.