Record Highs – Monday Morning Market Memo – March 25, 2024

Record Highs – Monday Morning Market Memo – March 25, 2024

All three major stock market equity indexes hit record highs last week.  For the week as a whole – the Dow Jones Industrial Average rose 2% (registering its best week of the year) to close at 39,476 – the NASDAQ Composite jumped 2.9% to 16,429 – the Standard & Poor’s 500 Index added 2.3% to 5,234 (its biggest weekly percentage gain of 2024).  The record highs came a day after the Federal Reserve said interest rate cuts are likely this year.

The Fed kept interest rates unchanged at its policy meeting last week, but their commentary was music to the stock market’s ears.  Chair Powell supported the idea interest rate cuts are coming (despite some recent hotter-than-expected inflation data).  The Federal Reserve stuck with projections for three interest rate cuts by the end of the year.  Further, the Fed raised its forecast for Gross Domestic Product (economic) growth and employment, while only minimally lifting its inflation forecast.  Overall, it was a Goldilocks scenario – not too hot or too cold – but just right.

Looking at the interest rate component more specifically, according to the CME FedWatch Tool the probability is approximately 71% the first rate cut by the Federal Reserve will come in June, versus 56% a week ago.  Bottom line, the stock market is still anticipating and looking forward to interest rate cuts at some point this year, and that is fuel for the rally.

Previewing the holiday-shortened week ahead (the financial markets are closed Friday in observance of Good Friday), we’ll be getting an important batch of economic data.  New Home SalesDurable GoodsConsumer ConfidenceInitial Unemployment Claims, along with the Personal Consumption Price Index will all be out this week and digested by investors.

As always, don’t hesitate to reach out if you have any questions or if you would like to set up a meeting with us.  Enjoy the upcoming holiday weekend!

All the best – Southport Station Financial Management, LLC