Broker Check

Weekly Market Update February 2, 2024

February 03, 2024

Fed Funds 5.25% - 5.5%, US Ten Year 4.02%, Oil $72.37
Dow Jones Industrial 38,654 +1.4%; S&P 500 4,959 +1.4%; 
NASDAQ 15,629 +1.1%


Stocks ended stronger this week following a sharp rally on Friday.  The S&P 500 hit another all-time high despite a Fed meeting on Wednesday and a Friday jobs report, which lowered the likelihood of the Fed cutting interest rates in the near future.  Despite these two data points, strong earnings from both META (+20%) and AMZN (+7.3%) helped boost the tech sector and the overall market on Friday.  In fact, META’s one-day performance added $205 billion to its valuation, the largest one-day gain in Wall Street history.

 

Investors continue to focus on the timing of interest rate cuts this year.  According to the CME Group, the probability of a March rate cut is currently 21%, down from 70% a month ago.  The probability of a May cut is currently hovering around 60%.  When it comes to the total amount of rate cuts we’ll see this year, most forecasters are looking for 100 to 125 basis points (1% - 1.25%), which would bring the Fed Funds rate to around 4-4.25%.  This compares to the estimates from the Federal Reserve of only 75bps of rate cuts this year.


 

 

Whether you agree with the Fed’s estimate of 75bps or the consensus estimate of 100-125bps of interest rate cuts, we are firmly committed to staying invested in this market.  As Friday’s earnings reports showed, there are stand-out performers within the S&P 500 (and we own both names for our clients).  Do not try to “time” the market based on 5 vs. 3 interest rate cuts in 2024 because, ultimately, the best companies will perform well and make money in either scenario – just ask Mark Zuckerberg.