Market Update January 2024
S&P 500 Index closed to about where it was two years ago in 2023. The overwhelming headwind of decades high inflation rate and the fastest tightening cycle in history dragged the markets through a two-year consolidation period that included a Bear market. Recent inflation data now trending towards the Federal Reserve’s (Fed) target ignited a broad-based rally in equities and fixed-income securities. Moreover, Chairman Powel’s comments implied that the FOMC may not hike rates again in this cycle, and that the FOMC was now discussing potential rate cuts in 2024 as it appears for the moment that a soft landing for the U.S. economy is a baseline scenario. Stocks and bonds have rallied in response to the end of the tightening cycle and anticipation of easier monetary policy.