What does 2024 have in store?

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Weekly Market Commentary
 

How did 2023 go for you?

Before the year ends, we like to sit down and review, thinking through what went well and what didn't. We try to mentally put the old year to bed before the new year kicks off.

As we enter the final weeks of 2023, let’s take a moment to review some of the year's major market and economic trends.

(Before we sign off, we’ll also pass along a few thoughts about what 2024 could have in store.)

AI became a major tech trend1

After ChatGPT launched in late 2022, the AI space race took off, with major updates and models hitting the headlines nearly every month.

AI will likely continue to play a major role next year as the tech matures and more companies find ways to use it in their operations.

Though major banks failed in Q1, we survived the crisis2

Markets reeled in the spring when several banks, including big leaguer Credit Suisse, failed in rapid succession due to exposure to risky assets. 

Though many worried the financial contagion would spread and kick off a bigger crisis, regulators moved quickly and were able to resolve the situation, protecting the overall financial system.

Washington's financial squabbles just kept coming

The federal government teetered on the brink of shutdown multiple times this year as lawmakers used financial deadlines to play at brinkmanship. 

Fortunately, a shutdown was averted . . . for now.

However, the political games affected U.S. credibility, leading ratings agencies to downgrade U.S. credit and financial outlook, which could increase consumer borrowing costs.3,4

Interest rates may have (finally) peaked5

The push-pull between high inflation and high interest rates continued to be a major trend this year.

However, now that inflation looks to be on a strong downward trend, the Fed might be done hiking and pivot to cutting rates in 2024.
 
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The economy shrugged off recession fears and grew6

Despite a lot of worrying headlines, we didn't actually see a recession in 2023.

In fact, the economy turned out three straight quarters of growth, powered by strong U.S. consumers.

Will the economy continue to grow? Or will high interest rates knock it off track?

We'll see in 2024.

Markets gained ground despite a bumpy road7

Despite many struggles along the way, the stock market rallied in 2023, regaining a lot of lost ground since the market bottom in 2022.

Some analysts say we're already in a bull market, while others won't officially call it until we regain the previous market peak.8

What does 2024 have in store for us?

We're watching a lot of trends.

With a contentious election season ahead, markets will likely find plenty of volatility.

A serious correction may be in store, especially if recession fears return.

However, despite what the overblown headlines will tell you, election cycles are just one of the variables that impact markets.

Economics, business performance, and plain old investor psychology all play a part in how markets perform.

Will that predicted recession show up in 2024?

Opinions are mixed, as always. Some economists see slowing growth next year with no recession, while others still believe a recession could happen.

Bottom line?

We’re watching, preparing, and thinking ahead about how to position our clients for various scenarios.

Do you have any questions or remaining tasks you'd like our help with? Just hit "reply" and let us know.

Until then, we hope you have a relaxing and amazing end to your 2023.

Sincerely yours,
 
Your Eagle Wealth Team
 

Last Chance for Toys for Tots


Eagle Wealth is participating in the Marine Toys for Tots program again and this is your last chance to drop off new, unwrapped toys at our office through TODAY, Tuesday, December 19th.
 
We’ll make a financial gift for every toy donated, so please join us in the fun!
 
P.S.  If you live outside of Central Oregon you can still participate.  Let us know if you make a donation locally and we'll put another toy in the box.

 

 

The Week on Wall Street

Markets reacted positively last week to cooler inflation and the idea of potential rate cuts next year, adding to the gains of the market’s year-end rally.

The Dow Jones Industrial Average rose 2.92%, while the Standard & Poor’s 500 gained 2.50%. The Nasdaq Composite index picked up 2.85% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, tacked on 2.75%.9,10,11

Rally Continues

Stocks gathered momentum last week after upbeat news from two key inflation reports. But the outcome of the Federal Open Market Committee (FOMC) meeting on Wednesday powered the week’s advance. The combination of the FOMC signaling three rate cuts in 2024 and dovish comments by Fed Chair Powell led to a sharp drop in bond yields and a spike in stock prices, with the Dow Industrials closing above 37,000 and setting an all-time high.12

The rally continued the following day as beneficiaries of lower rates, such as smaller capitalization stocks and real estate, rallied. A solid retail sales number, which reflected a strong consumer and supported the soft landing thesis, also boosted enthusiasm.

Inflation Eases

The anxiously awaited read on November inflation came close to market expectations, with a 0.1% increase over October and a year-over-year increase of 3.1%. Core inflation, which excludes energy and food prices, came in a bit hotter, rising 0.3% month-over-month and 4.0% from a year ago. A 2.3% decline in energy costs helped offset a 2.9% jump in food prices. Shelter prices remained stubbornly high, rising 0.4% from October and 6.5% from last November.13

The inflation news was better on wholesale prices, tracked by the Producer Price Index (PPI). Producer prices were unchanged in November and higher by just 0.9% year-over-year. Excluding energy and food, the monthly increase was also unchanged.14

 

 
 

Any companies mentioned are for informational purposes only, and this should not be considered a solicitation for the purchase or sale of their securities. Any investment should be consistent with your objectives, time frame, and risk tolerance

1. https://www.mckinsey.com/capabilities/quantumblack/our-insights/the-state-of-ai-in-2023-generative-ais-breakout-year

2. https://www.gao.gov/blog/march-2023-bank-failures-risky-business-strategies-raise-questions-about-federal-oversight

3. https://www.reuters.com/markets/us/moodys-changes-outlook-united-states-ratings-negative-2023-11-10/

4. https://www.fitchratings.com/research/sovereigns/fitch-downgrades-united-states-long-term-ratings-to-aa-from-aaa-outlook-stable-01-08-2023

5. https://www.kiplinger.com/economic-forecasts/interest-rates

6. https://www.usbank.com/investing/financial-perspectives/market-news/economic-recovery-status.html

7. https://www.jpmorgan.com/insights/outlook/market-outlook/a-2023-look-back-what-we-got-right-and-wrong

8. https://www.reuters.com/markets/us/bull-market-view-after-sp-500-hits-fresh-year-high-2023-12-04/

Chart sources: https://fred.stlouisfed.org/series/FEDFUNDS, https://fred.stlouisfed.org/series/CPIAUCNS

9. The Wall Street Journal, December 15, 2023

10. The Wall Street Journal, December 15, 2023

11. The Wall Street Journal, December 15, 2023

12. CNBC, December 13, 2023

13. CNBC, December 12, 2023

14. CNBC, December 13, 2023

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