February 2024 Stock Market Outlook
Treasury yield fell Wednesday to its lowest level since July as traders assessed the path of future rate cuts from the Federal Reserve. General Mills — The food products stock fell more than 2% after General Mills lowered its sales outlook for the full year. Revenue for the fiscal second quarter was also weaker than expected, coming in at $5.14 billion. Stovall said it is important to know that markets can swing back in a hurry after downturns.
Existing-home sales cooled in December, down 1% from the month before and 6.2% from a year prior. 2023 ended with existing-home sales plummeting to 4.09 million, a 28-year low, according to the latest monthly National Association of Realtors (NAR) data. And, of course, mortgage rates would need to cool off—which finally seems to be coming to fruition, with rates declining toward the end of 2023 and holding below 7% so far in 2024.
That prompted Glenmede chief investment officer of private wealth Jason Pride to note in a report that these are the most dramatic annual price increases for food since Sony released the Walkman portable cassette player. The market has grown increasingly nervous that the Fed will raise rates faster and higher than expected to get inflation under control. The forecast is for a year-over-year increase of 8.8% for overall producer prices and 7.1% over the past 12 months for core PPI, which excludes food and energy costs. Heading into the second half of 2023, there are signs that the Fed may be coming to the end of its hiking cycle. Its July rate increase, the 11th since March of the previous year, was met with more confidence that this latest boost will be the last. This optimism is viewed as highly supportive for the price of gold; nonetheless, the yellow metal has tracked lower, even sliding down to the US$1,880 range in mid-August.
The one-two punch of corporate earnings from America’s biggest companies and economic data could ultimately set the direction of the stock market for weeks to come as investors grapple with whether or not the record rally can continue. According to data from FactSet, Wall Street expects 2024 S&P 500 earnings growth of 12.2%, which has accelerated in recent months and is well above the 10-year average of 8.4%. Any disappointment in earnings guidance could send the stock market reeling as analysts adjust their profit estimates lower. The gold price started 2022 at around US$1,800 per ounce, and just before Russia invaded Ukraine on February 24 of that year, gold was trading at US$1,864. Mortgage rates and residential real estate prices surged, and average monthly mortgage payments hit record levels, creating a perfect storm of home unaffordability. Dave Liniger, the founder of real estate brokerage RE/MAX, says the sharp rise in mortgage rates has skewed the market.
- The market is worried that hotter-than-expected inflation will prompt the Federal Reserve to raise interest rates more aggressively, inflicting serious damage to the US economy in the process.
- Taking all this into account, housing economists and analysts agree that any market correction is likely to be a modest one.
- But traders’ focus shifted to worries that the market might be oversupplied after the U.S. produced an estimated 13.3 million barrels per day of crude last week, a new record.
- CPM Group’s Christian said his firm sees the potential for gold to take another run at its record high next year, and he pointed to many “substantive real reasons” for investors to get excited about gold and where it’s going.
Three in particular were solidly in green thanks to strong earnings. Even though the hotter-than-hoped-for inflation report is sparking fears of more big rate hikes from the Federal Reserve, some optimists are starting to see light at the end of the Fed tightening tunnel. If that’s true, inflation pressures could finally start to subside more dramatically. Investors may be hoping that’s the case, which is one reason to justify the big stock market surge Thursday.
The Nasdaq Composite entered correction last Wednesday, ringing up a fall of at least 10% from its recent Nov. 19 peak, which meets the commonly used Wall Street definition for a correction. On Friday, the Nasdaq Composite stood over 14% below its November peak and was inching toward a so-called beaxy exchange review bear market, usually described by market technicians as a decline of at least 20% from a recent peak. Equity benchmarks are being substantially recalibrated from lofty heights as the economy heads into a new monetary-policy regime in the battle against the pandemic and surging inflation.
Many analysts think there’s enough support for gold to once again rise above US$2,000 this year or next. “I think (gold) is going to break above that US$2,100 level, I think it’s going to run,” Patrick Yip of APMEX told INN. If you want to know when gold will go up, the yellow metal’s past performance is a good place to start. Let’s start with a look at its price action during the breakout of the Russia-Ukraine war.
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Core PCE, which excludes volatile food and energy prices and is the Fed’s preferred inflation measure, was up 3.2% in November, still well above the Fed’s long-term target of 2%. The S&P 500 was down more than 3% and just four stocks in the blue chip index were in positive territory. Agriculture company Corteva (CTVA) was the S&P 500 leader, gaining 2% following news of a stock buyback.
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Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, says investors are seemingly expecting the Fed to be extremely aggressive in cutting interest rates in 2024. Economists expected prices would fall very slightly in August as gas prices have dropped for 91 straight days. Instead, prices rose, giving investors a collective heart attack over the Fed’s plans to curb inflation. Wall Street’s mood has largely tracked the rapidly changing expectations regarding inflation and rate hikes. Just a month ago, before Fed chair Jerome Powell gave a speech that suggested more big rate increases were coming, the Fear & Greed Index was indicating levels of Greed, a sign of complacency. It was a broad-based slide, with all eleven sectors of the market heading lower.
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Ultimately, gold ended the first half of last year around the same price at which it began, supported by multi-decade highs in inflation and ongoing geopolitical uncertainty. In fact, the yellow metal was one of the best-performing asset classes in the first half of 2022, even in comparison to stocks and inflation-linked bonds. When buying gold, one of the main risks is to get in at the wrong time.
The packaging company’s adjusted earnings per share and revenue also came out lower than estimates, driving shares lower by 9% after market close on Tuesday. It just goes to show that even in a bear market and with recession fears swirling due to concerns about uber-aggressive rate hikes from the Fed to try and stomp out inflation, investors still need to focus on fundamentals. Andrew Patterson, senior international economist at Vanguard, told me he thinks rate cuts are unlikely until 2024. Patterson said the Fed — and investors — need to still be concerned about how so-called core inflation (excluding food and energy) has yet to cool dramatically. Fourth-quarter earnings season kicks off in January, and analysts are expecting another quarter of modest growth. Wall Street consensus estimates predict 2.4% earnings growth and 3.1% revenue growth for S&P 500 companies in the fourth quarter.
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The Dow plummeted more than 1,050 points, or 3.3%, in late afternoon trading Tuesday. The S&P 500 and Nasdaq fared even worse, tumbling 3.6% and 4.5% respectively. Gold’s ability to withstand https://traderoom.info/ political and economic turmoil has been on full display the past few years. “Because you can see in 2019, gold was US$1,300 an ounce, then it got to over US$2,000 in August of 2020.
The S&P 500 is coming off two weeks that saw record highs in the benchmark index, buoyed by earnings optimism and data showing that the US economy is growing at a healthy clip even as inflation continues to show signs of cooling. Oil prices rose more than 1% earlier in the day as traders worried that threats to shipping in the Red Sea from militants based in Yemen could disrupt crude supply. BP this week paused shipping through the Suez Canal due to safety concerns.