Happy New Year! 2024 Promises to be Interesting.

A choir of optimistic investor sentiment closed 2023 on a high note, as expectations of “steep cuts to interest rates” may be at odds with the Federal Reserve’s (Fed’s) actual sheet music. Considering the tumult of the year as sentiment focused on economic and inflation data, this discordance isn’t all that surprising and could signal volatility to come, but in the meantime, the market environment looks a lot brighter at the tail end of 2023 than it did at the close of a dreary 2022.

“December’s rally was fueled by a further deceleration in inflation and the Federal Reserve’s switch at the last FOMC (Federal Open Market Committee) meeting of the year to a more dovish tone and talk of Fed interest rate cuts in 2024,” said Raymond James Chief Investment Officer Larry Adam. “However, it is important to put the positive year of performance into perspective: 2023 was a reset year as the over 25% return for the S&P 500 only recouped most of the losses from 2022.”

Prepare for Landing

Markets have begun to believe that the Fed will cut rates several times in 2024. We believe that the Fed is more concerned about a potential reacceleration of inflation and will move carefully. The economic outlook for 2024 should not be year of ‘recession’ but rather a year of ‘sustained disinflation with weak economic growth.’

Market Performance in a Presidential Election Year

We would not be surprised to see 2024 market performance track traditional presidential election years, where there are pockets of weakness during periods of the greatest uncertainty, but a market rebound and renewed strength as we receive clarity on key issues. The most likely scenario remains a rematch of the 2020 election.

We’ve included links to a few articles that may interest you below.

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Ongoing Changes to Retirement Planning

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ROTH IRA’s and Associated Rules

Unsolicited Offers on Your Home? Some things to Keep in Mind

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