Stock Market Commentary April 2024

Apr 1, 2024 | Blog

Inflation on the Rise

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Inflation on the Rise, but the Market Does Not Seem To Care (Yet)

In March, we received the February Consumer Price Index report and saw that inflation is increasing rather than decreasing. While it is a far cry from the 9% inflation rate in June 2022, Core CPI rose 0.4% and was up 3.8% on the year. On Friday, March 29th, we received more inflation data that showed energy prices increased 2.3% in one month. 

The stock market performed well in March despite these concerns. The Federal Reserve met this month and said that despite the fact that inflation has stopped going down, they still plan to cut interest rates three times this year. We believe the market has moved up a bit too fast and is overdue for a short-term drop. In our opinion, this drop could be 3% all the way up to 15%.

 

Four Reasons for Long-Term Optimism

However, we believe the drop will be short-lived because, in the longer term, four pieces of evidence are currently making us optimistic that the next seven months until the election have the potential to be good for stocks overall despite some potential short-term bumps in the road. 

  • First, in our opinion, every President who is running for election wants to get re-elected, so they make moves that potentially “window dress” the economy and stock market before the election. Please check out the chart in this article for a refresher.
  • Second, in late April of 2023, one of our most important longer-term indicators shifted from negative to positive. It had been negative since the first quarter of 2022, when we saw the bulk of our previous market volatility, and then it flipped positive to participate in the recovery during 2023. It remains positive at this time, so we remain optimistic about future performance.
  • Third, our short-term and intermediate-term indicators are still positive, so four out of four preferred indicators are currently positive.
  • Lastly, while past performance cannot predict future performance, the 200-day moving average of the S&P 500 has turned and has been heading up rather than down. This is a longer-term trendline, and in the past, it has had some success identifying a change in trend. 

 

Federal Reserve Policy Easing (lower rates)? 

We had a different indicator last year declare that there is a chance we’ll have a recession within the next year. We’re hoping that recent improvements in the overall economy, inflation data, and the housing market, as well as signals from the Federal Reserve that interest rates may be lowered in 2024, will provide some stability moving forward. 

 

Speak With a Trusted Advisor

We’d love to have a review meeting with you to discuss investments, retirement planning, college planning for kids or grandkids, tax preparation, health insurance, including Medicare supplemental and prescription drug plans, and various other financial planning topics. Please get in touch with our office at (586) 226-2100 to schedule a meeting today!

If you’ve had any changes to your income, job status, marriage status, a new birth in the family, 401K options, address, risk tolerance, or any other financial changes, please get in touch with us right away.

Sincerely,

Kenneth Wink

with contributions from Robert Wink, James Wink, Zachary Bachner, and James Baldwin

 

Ken Wink is the Co-Founder and Chief Compliance Officer of Summit Financial Consulting, LLC. With over two decades of experience in the financial services industry, he is deeply knowledgeable and passionate about explaining complex financial concepts in understandable terms. Ken writes articles geared towards conveying financial topics in clear, straightforward language, making them accessible to everyday people.

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