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Weekly Market Insights: Fed Talk Boosts Stocks

Weekly Market Insights: Fed Talk Boosts Stocks

March 25, 2024

Stocks had their best week of the year after the Fed decided to keep rates steady and signaled three possible rate cuts.

Stocks Bounce Back

The Federal Reserve had a two-day meeting and, as expected, decided to keep interest rates unchanged. However, what was somewhat surprising is that the Fed indicated its intention to cut interest rates three times this year, by a quarter percentage point each time. This was seen as a positive surprise for some who were worried that recent high inflation reports would cause the Fed to change its stance.

Following this news, the markets rose on Wednesday, with all three averages closing at record highs. The rally continued on Thursday, further boosted by news that existing home sales had increased by 9.5% in February.

The rally was broad-based overall, with 10 of the 11 S&P 500 sectors posting gains (the health care sector dropped slightly). At one point towards the end of the week, almost one in four S&P 500 stocks were trading at 52-week highs, which was the highest proportion in three years. This supports the idea that the rally was broadening out from mega-cap tech stocks.

Source: YCharts.com, March 23, 2024. Weekly performance is measured from Monday, March 18, to Friday, March 22.
ROC 5 = the rate of change in the index for the previous 5 trading days.
TR = total return for the index, which includes any dividends as well as any other cash distributions during the period.
Treasury note yield is expressed in basis points.

Turning Point

The decision of the Federal Open Market Committee indicates that the Fed has reached a turning point as they have signaled that their target range of 5.25 to 5.50 percent has reached its peak. This target range, which has been in place since late last year, is the highest level in 23 years.

During the post-meeting press conference, Fed Chair Powell stated that they believe that their policy rate has most likely peaked for this cycle. He further added that if the economy continues to progress as it is, the FOMC would likely begin dialing back policy restraint at some point this year. If the FOMC decides to ease it at their June meeting, it would be the first cut in four years.

This Week: Key Economic Data

Monday: New Home Sales.

Tuesday: Durable Goods Orders. Case-Shiller Home Price Index.

Wednesday: EIA Petroleum Status Report. Survey of Business Uncertainty.

Thursday: Gross Domestic Product. Jobless Claims. Consumer Sentiment. Pending Home Sales.

Friday: Personal Income and Outlays. International Trade in Goods. Retail Inventories.


Source: Investors Business Daily - Econoday economic calendar; March 18, 2024
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.


This Week: Companies Reporting Earnings

Tuesday: McCormick & Company, Incorporated (MKC, MKC.V), Dave & Buster’s Entertainment, Inc. (PLAY)

Wednesday: Paychex, Inc. (PAYX), Carnival Corporation (CCL, CUK), Cintas Corporation (CTAS)

Thursday: Walgreens Boots Alliance, Inc. (WBA)


Source: Zacks, March 19, 2024
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

"There is nothing so pitiful as a young cynic because he has gone from knowing nothing to believing nothing."

– Maya Angelou

Rules for Home Office Deductions

If you have a business that operates from your home, the IRS allows you to deduct certain expenses on your tax return. However, there are certain things you must keep in mind:

- The IRS requires that you use your office or a part of your home for "regular and exclusive use". This means that the part of your house you use for your business should be your primary place of work, a place where you meet clients, or a separate structure dedicated to your business, such as a garage or studio.

- To calculate your deduction, you can use one of two methods:

- The simplified option allows you to multiply the allowable square footage of your office by $5, up to a maximum of 300 square feet.

- The regular method allows you to specifically calculate the actual expenses that you pay for the portion of your home used for your business, such as rent, mortgage interest, taxes, repairs, depreciation, and utilities. If you only use part of a space for your business, you must determine the percentage devoted to business activities.

Please note that this information is not intended to substitute specific, individualized tax advice. We recommend that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS.gov6

Eating to Your Heart’s Content  

Making the decision to change your diet can be overwhelming. It can be challenging to determine which diet is the best fit for you, especially with many fad diets that come and go. However, there are a few diets that have stood the test of time, and the most popular one is the Mediterranean diet.

The Mediterranean diet is a lifestyle shift towards healthier eating habits, inspired by the traditional cuisine of Italy and Greece. This diet has remained relatively unchanged since the 1960s, and studies show that it is associated with lower rates of heart disease, type 2 diabetes and other chronic illnesses. The diet emphasizes the consumption of fruits, vegetables, legumes, nuts, seeds, fatty fish, whole grains, and olive oil, while reducing the intake of meats and dairy products. The diet is flexible, and the goal is to balance nutrient-rich and energy-dense foods, rather than eliminating any specific type of food.

Food plays a significant role in our lives, and healthy eating choices can help promote a healthier lifestyle. Although the Mediterranean diet can be a good option, it is important to note that no single diet will suit everyone's preferences, lifestyle, and health needs. Therefore, it is recommended to discuss your dietary choices with a physician or registered dietitian first.

Tip adapted from Healthline.com7

Which positive whole number can you add 1.5 to and get the same result as multiplying it by 1.5?

  

Last week’s riddle: The letters in the words meter, man and uses may be rearranged to make a 12-letter word. What is this word? Answer: Measurements.

Peregrine Falcon, Cantabrian Coast, Spain

 

Footnotes and Sources


1. The Wall Street Journal, March 22, 2024

2. CNBC.com, March 20, 2024

3. Sectorspdrs.com, March 22, 2024

4. MarketWatch.com, March 22, 2024

5. The Wall Street Journal, March 21, 2024

6. IRS.gov, November 14, 2023 

7. Healthline.com, December 18, 2023

Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.

The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.

U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Please consult your financial professional for additional information.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.

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