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Hello,
It's been a wild August for markets.
Recession fears kicked off the worst selloff since 2022 at the beginning of the month.
Then markets staged a choppy recovery, even notching the strongest week of the year along the way.1
That's not so surprising.
It's very common for a strong recovery to follow a selloff.
It's one of the many reasons we recommend not abandoning an investing strategy when markets get jittery.
(If you ever feel tempted, please reach out so we can talk.)
While we can't predict the future, we can show you what has historically happened and offer reassurance.
So, what could happen next for markets?
We expect more volatility ahead.
Despite renewed recession fears, fresh data seems to have eased investor anxiety and boosted hopes that a recession-free "soft landing" is still achievable.
That's good news for markets, but there are plenty of risks to watch.
Let's take a look.
What positive factors could push markets higher?
Inflation continues to head downward, which is good news for consumers and supports the case for interest rate cuts this year.2
Other economic data is also showing optimism.
Retail sales jumped unexpectedly, suggesting American consumers are doing better than expected.3
Since consumer spending accounts for about 70% of U.S. economic growth, it's a big indicator of economic health.
Analysts currently expect the Federal Reserve to cut interest rates in September.4
Notes from the last Federal Open Market Committee meeting showed that policymakers are close to cutting rates, supporting hopes for a September cut.5
What negative factors could trigger a selloff?
The labor market is showing cracks.
The unemployment rate ticked up in July to its highest level since October 2021, and job growth slowed more than expected.6
You can see in the chart above that job creation has been slowing down over the past two years.
That's not entirely surprising since the labor market has been recovering from pandemic disruptions.
However, a recently released annual revision of job data showed that the economy added nearly 30% fewer jobs over the last 12 months than originally reported.7
If the labor market weakens and Americans start to worry about their financial situation, it could erode consumer confidence and spending later in the year.
The past few weeks have shown us how easy it is for investors to lose their optimism in a selloff…
And then quickly regain it in a recovery.
While markets tend to reflect the economy in the medium and long term, the opposing emotions of fear and greed tend to have greater influence in the short term.
We're seeing a lot of reasons to be optimistic, but we're also watching some clouds on the horizon.
Though it doesn't seem likely that a recession is here or even around the corner, we're monitoring the data closely and will be in touch as needed.
Have questions about what markets are doing? Hit "reply" and let us know.
Sincerely,
Your Eagle Wealth Team
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Checking in on RSVP Status for the Client Appreciation Event
This past Friday was the deadline for mailing back your RSVP card.
If you didn’t get a chance to put it in the mail, please send us an email or give us a call to let us know if you’re able to join us on September 13th for the client appreciation event.
We’d love to hear from you!
You can simply hit “Reply” to this email and let us know if you’re coming, which meal choice you’d like, and if you have any dietary restrictions.
Remember to invite a special guest or two that you’d like to introduce to us. If they’re able to join us, we’ll also need their names, food selections, and email addresses.
We hope to see you at Tetherow in a few weeks!
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Welcome Our New Operations/Marketing Director, Wendy Kottke!
We are thrilled to introduce you to our new Operations/Marketing Director who Chad and Cami have known since 2008! Wendy Kottke joined our Eagle Wealth Team earlier this year and has been adding great value to our community.
Early in her career, Wendy had the chance to interview financial advisors to discover why they love what they do. She would then create videos showcasing their stories and passions. It always resonated with her when they'd share something like, "I take it very personally and do everything I can to ensure that when someone tells me, 'This is everything I have, please help me make it last for the rest of my life,' I do whatever I can to make that dream happen." What a cool industry!
After earning her associate degree in accounting and bachelor’s degree in management and communication, Wendy started work in accounting. But she quickly realized she needed more interaction with people than with numbers. Wendy found herself chatting with the mailman every day just to have someone to talk to! Her next role was in communications for a large corporation, which brought her closer to her dream. For 17 years after that, Wendy worked in marketing and business development in the financial services industry, which is also when she met Chad and Cami! She eventually transitioned solely to business development and strategy. Now, at Eagle Wealth, she can work on business development and strategy while also adding back the marketing, which checks all the boxes for her.
“It's so cool to see how much joy the EWM team finds in their work; it feels like caring hearts focused on helping people,” boasts Wendy.
She was born and raised in Greenville, Wisconsin and made the "big move" ten minutes west to Hortonville when she bought her home. The amazing man in her life, Steve, makes her smile and laugh every day, and she’s so thankful. They have five grown children: Justin, Brooke, Megan, Allison, and Emma. They also are thrilled to be grandparents of a beautiful, little granddaughter, Aurora.
Fun fact: Wendy finds chaos and change enjoyable—for some crazy reason!
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The Week on Wall Street
Stocks notched a solid gain as dovish comments from Federal Reserve officials boosted the market’s recovery from early August lows.
The Standard & Poor’s 500 Index rose 1.45 percent, while the Nasdaq Composite added 1.40 percent. The Dow Jones Industrial Average picked up 1.27 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, gained 2.98 percent.1,2
Dovish Week
Stocks started the week strong, rallying after Wall Street welcomed dovish comments from Minneapolis Fed President Neel Kashkari. The S&P 500 and Nasdaq each posted gains on Monday–the 8th consecutive winning session. The Dow rose for the 5th session in a row.3,4
From there, markets traded in a narrow band until Wednesday afternoon when minutes released from the July 30-31 FOMC Meeting revealed more dovish comments. On Thursday, stocks dipped ahead of Fed Chair Jerome Powell’s annual Jackson Hole, Wyoming, speech.5,6
Well-received comments from Powell on Friday boosted markets, with all three averages closing higher.7
“The Time has Come”
The Fed’s annual symposium for global central bankers started Friday morning with Fed Chair Powell’s much-anticipated speech. Citing the risk of the labor market cooling even further, he said, “the time has come for policy to adjust.”
Investors responded favorably, with the remaining question being how significant a rate cut might be. Powell kept that door open, adding that “the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”8
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Source: YCharts.com, August 24, 2024. Weekly performance is measured from Monday, August 19, to Friday, August 23. TR = total return for the index, which includes any dividends as well as any other cash distributions during the period. Treasury note yield is expressed in basis points.
Past performance is not a guarantee of future results. 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
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Article Sources:
1. https://www.cnbc.com/2024/08/18/stock-market-today-live-updates.html
2. https://www.bls.gov/news.release/cpi.nr0.htm
3. https://www.cnbc.com/2024/08/15/retail-sales-july-2024-.html
4. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
5. https://www.cnbc.com/2024/08/21/fed-minutes-july-2024.html
6. https://www.cnbc.com/2024/08/02/job-growth-totals-114000-in-july-much-less-than-expected-as-unemployment-rate-rises-to-4point3percent.html
7. https://www.cnbc.com/2024/08/21/nonfarm-payroll-growth-revised-down-by-818000-labor-department-says.html
Chart source: https://fred.stlouisfed.org/series/PAYEMS#0, trend line is linear
Market Update Sources:
1. The Wall Street Journal, August 23, 2024
2. Investing.com, August 23, 2024
3. The Wall Street Journal, August 23, 2024
4. The Wall Street Journal, August 19, 2024
5. MarketWatch.com, August 22, 2024
6. Reuters.com, August 22, 2024
7. The Wall Street Journal, August 23, 2024
8. The Wall Street Journal, August 23, 2024
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Please consult your financial professional for additional information.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 FMG Suite.
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