When you see hypothetical examples of stock market performance, the illustrations often use average annual returns of between 8% and 10%. But how often does the stock market return between 8% and 10%? Only four times in the past 76 years.1 Through March 22, the Standard & Poor’s 500 index had gained 10% year-to-date. So does that mean you should expect an “average” year?2 At its March meeting, Fed Chair Powell said the Fed still anticipates cutting short-term rates three times this year. That move boosted investor confidence in the short term and may help boost longer-term confidence, too.3 For example, lower interest rates can help the overall economy as the trend often emboldens CEOs to make long-term capital investments, which helps set the groundwork for future growth. When will the Fed make its first move? As you can see from the table, more economists are starting to believe it’s a late 2024 decision. But remember, the stock market is a discounting tool, meaning it’s looking 6 to 9 months into the future. So, today’s S&P 500 is seeing business conditions in the October-to-December timeframe. |
Stock prices are off to a solid start in 2024. But that shouldn’t have you rethinking your strategy. Remember, we created your investment approach based on your goals, time horizon, and risk tolerance. Unless one of those has changed, let’s stay the course. |
1. Finance.Yahoo.com, March 25, 2024 |
2024 Outlook: Fed Stays the Course
