Tuesday, May 21, 2024

Waiting for the Federal Reserve

Markets shed points off their highs in late March. The DOW closed at 39,282, or up 5.6 percent on March 28, then sank more than 1,400 points through April but recovered by mid-May to nearly touch 40,000 at 39,908, or up 5.9 percent.

Fed Chair Powell and his board are not cutting interest rates but after the May meeting lower price pressure and a strong sense of a soft landing, the market was greatly relieved. Three rate cuts were expected beginning in June. Now, the market will be pleased with one before year end. However, market watchers are still optimistic and predict an up-DOW/year of 9 percent. Notice the tech heavy NAZ and broad S&P index are up nearly two times the DOW for the year.

The positive viewpoint reflected the amazing resilience of an economy that has faced a surge of post-pandemic inflation, aggressive rate-hiking and geopolitical turmoil from two wars and two hostile great powers. In spite of this, the GDP is up, consumer spending is strong, and unemployment is down.

Dow Jones May 2024

Some observers believe US stocks are overvalued, especially technology and the US is heading for a major slowdown with a market dip. But Jamie Dimon observes investment money from around the world believes the American market remains the safest, and its top companies are worth the pricey valuations.

Bull Market Continues to Run (February 29, 2024)

1 comment:

Dave Barnes said...

The DOW is a terrible metric.
S&P500 is much better.