Market Review & Preview – Monday Morning Market Memo – January 29, 2024

Market Review & Preview – Monday Morning Market Memo – January 29, 2024

After some encouraging economic data (moderate inflation and stronger-than-expected Gross Domestic Product growth), all three major stock market indexes finished on higher ground last week.  The Dow Jones Industrial Average rose .7% to 38,109 – the NASDAQ Composite gained .9% to 15,455 and the Standard & Poor’s 500 Index rallied 1.1% to 4,891.  The three averages are now working a 3-week winning streak and are up 12 of the last 13 weeks.

The S&P 500 has returned to record highs for the first time in two years, powered largely by expectations for interest rate cuts, growing investor belief the U.S. economy will avoid recession, and optimism over artificial intelligence.  Investors are hoping the good times keep on rolling and the week ahead may prove pivotal in determining if that happens.

This week is packed with potentially market moving data/news/events.  Items including a high-profile earnings parade, a Federal Open Market Committee meeting, a press conference by Chair Powell, and an important jobs report are all going to fill the market’s plate.  Looking at these items in that order…..

Earnings season is in the spotlight this week, highlighted by reports from mega cap technology stocks, with AlphabetAmazon.comAppleMicrosoft, and Meta Platforms all reporting.  These are 5 of The Magnificent Seven, and just to clarify for all the western fans out there, we are not referring to the classic western movie starring Charles Bronson, Steve McQueen and Yul Brynner.  Rather, this magnificent seven is the popular group of growth stocks that has been powering the market higher over the last year (in addition to the above mentioned, the other two of the group are NVIDIA and Tesla).

Fed Meeting – The Federal Reserve concludes its two-day policy meeting on Wednesday, with a press conference by Chair Powell to follow.  The Fed is almost certain to leave interest rates unchanged, but the market will be gauging if, when, and by how much the central bank will cut rates this year.  According to the CME FedWatch Tool: the probability is 97.9% the Fed will leave rates unchanged at this week’s meeting; the probability is just under 50% for a rate cut in March; the probability of a rate cut at the May meeting is 89.5%.

January Jobs Report – Closing out the week, is the January Jobs Report, scheduled for release by the U.S. Bureau of Labor Statistics on Friday morning.  Expectations are the economy added 175,000 jobs and the unemployment rate ticked up a notch to 3.8%.  The employment situation is extremely important, and these job reports, along with inflation data, are used by the Fed to formulate monetary policy.

It is going to be an eventful week, and the full plate of key earnings reports, policy decisions, and economic data will be major factors/determinants of upcoming market volatility/direction.  As always, don’t hesitate to contact us with any questions or if you would like to set up a meeting.

All the best – Southport Station Financial Management, LLC