Monthly Market Update
Submitted by TLWM Financial on April 1st, 2024
March was yet another strong month for stocks, with the S&P 500 rallying roughly 3%, bringing first quarter returns to about 10%. This robust start to the year comes on the heels of a great close to 2023. In fact, when we look at the last 6 months the S&P 500 has gained over 20%. (YCharts)
While it’s important to participate in periods of stock market strength we’re always on the lookout for signs of economic and market weakness. Currently, we are positioned for growth as we believe there are few signs of an imminent recession.
One of the most important influences on the outlook for both the economy and stock market this year is Federal Reserve policy. The intense focus on the Fed comes as a result of shifting policy (from restrictive to accommodative), and investors’ desire to know when the expected shift will become reality.
The March Fed meeting was an interesting and important one as it provided some updated clarity on this topic. Today, we’re going to highlight the biggest takeaways from that meeting:
1.) Economic Growth – the Fed increased their projection for 2024 GDP growth to 2.1% from 1.4%, suggesting they feel better about the economy’s overall trajectory.
2.) Inflation– the Fed also shifted their outlook for inflation slightly higher, as they increased expectations for PCE to 2.6% from 2.4%.
3.) Rate Cuts – given higher economic growth and inflation projections many investors may have expected to see the Fed shift their outlook on cuts, instead, they reiterated that they expect to cut 3 times in 2024. The first cut is widely expected to come in June.
4.) Balance Sheet – the Fed has been engaged in Quantitative Tightening (QT), another policy tool used in an effort to dampen inflation, since June, 2022. Chair Powell’s statement suggested that the Fed is getting closer to tapering their QT efforts which should ease this headwind over time.
Coming out of this Fed meeting, we believe the expected shift from restrictive to accommodative policy this year is still firmly in place, despite the recent stronger economic and inflation data. We’ll continue to keep a close eye on Fed policy, economic data, and corporate earnings as the year progresses and will be ready to make adjustments to portfolios as needed.
As always, please don’t hesitate to reach out if you have any questions and please feel free to pass this email along to any friends, family, or colleagues that you feel would benefit.
Sincerely,
Your Team at TLWM
* Investment advice offered through TLWM, LLC., a registered investment advisor.
* The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
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* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
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* You cannot invest directly in an index.
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