ClientFirst Financial Strategies
Financial Planning and Portfolio Management
All three major US stock market indices rebounded hard this week. Most of the hope hinges on the Federal Reserve meeting occurring September 17-18. At this juncture, it appears to be a coin flip whether the Fed will reduce the Fed Funds rate by 0.25% or 0.50%.
Labor Day is behind us, which means we’re squarely in September. That’s certainly what the stock market reinforced with its performance last week! Historically, volatility rises in September and October, especially in presidential election years.
Friday, August 23rd was the day the stock and bond markets had been anticipating for over one year. Federal Reserve Chairman Jerome Powell announced “the time has come” to begin lowering the Fed Funds interest rate!
The US stock market indices came roaring back from its debacle a couple weeks ago with all three posting solid gains. Inflation and retail sales data reinforced the probability of a September rate cut and fueled the week’s bull run.
All three major US stock market indices were down last week. More than likely, Monday’s 12.4% plunge in Japan’s Nikkei spurred shockwaves in the US.
At this juncture, there’s no question that the Federal Reserve’s eleven rate hikes from March 17, 2022 through July 26, 2023 have taken effect in slowing the US economy. Friday’s reported unemployment rate increased to 4.3%, causing interest rates on the 10-year US Treasury Note to plunge from 4.19% last week to 3.79%.
For the second week in a row, the three major US stock market indices posted mixed results. Lower 2Q2024 earnings were largely to blame for stocks that pulled back.
The big news come Friday wasn’t a tech-bubble burst or election campaign scene. It was a software update glitch that took down everything from airlines to credit card companies…as well as the US markets!
Post July 4th holiday celebrations, a couple things became clearer:
1. The economy is slowing; and
2. Fed Chair Powell intonated when interest rates may decrease.
It was a quiet week on the stock market market front ahead of July 4th. It was also a quiet week for economic reporting, leaving Nvidia performance—down >2% last week but up 149% year-to-date—as the main market catalyst.