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Q1 2024 Newsletter

The first quarter of 2024 has been marked by a robust performance in the stock market,  despite ongoing high interest rates. The S&P 500 realized a significant gain of over10%. Technology stocks led the gains, largely driven by the burgeoning artificial intelligence sector, while value stocks realized more modest gains.

 

On the economic front, the quarter was characterized by  stronger-than expected growth.  However, inflation remained persistent, causing the Federal Reserve to delay expected rate cuts until at least June. Initially, investors anticipated up to five rate cuts in 2024, but have adjusted their expectations to a maximum of three.  Federal Reserve Bank of Atlanta President Raphael Bostic has stated in recent interviews that perhaps only one interest rate cut may be realized in 2024.

 

The bond market’s performance was impacted by the delayed rate cuts, with yields pushing higher and bond prices moving lower. Non-US stocks benefitted from a strong US dollar. Earnings growth emerged as a key driver for stock prices, which may bode well for international stock prices as overall valuations are low relative to their U.S. counterparts.

 

The economy also faced potential threats to its growth, including a bifurcation with interest rate-sensitive sectors still in recession, such as the manufacturing sector, while the services sector continued to expand.  Headline inflation trended lower, but wage pressures in the services sector, along with other factors like housing prices and insurance costs, suggested that the Fed might maintain elevated rates to achieve their 2% inflation target.  As of this morning, April 10, the Consumer Price Index sits at a stubborn 3.5%.  


Sincerely,



Joe Tomkiewicz MS, CFP®

CA Insurance License #0C61979

President

Sierra Financial Advisory


Michael Tomkiewicz MA, CFP®

CA Insurance License #4063677

RIA Representative

Sierra Financial Advisory