Weekly Market Insights 05.13.24

Markets Push Ahead!

Financial Markets

United States financial markets continued their remarkable run this past week.  The Dow gained 2.16%, the S&P 500 gained 1.85%, and the NASDAQ gained 1.14%. The S&P 500 (cap-weighted) finished higher for the third straight week, with a total return of 10.03% this year, and is less than 1% away from its all-time high—a remarkable run under any circumstances.  Just think, this is happening while two wars abroad show no signs of ending, a contentious presidential election is heating up, inflation has proven to be stickier than hoped, and opinions remain deeply divided regarding the Federal Reserve’s policies.

An interesting thing to watch—does the Dow, with a total return of 5.48% this year, which is heavily influenced by financials and industrials sectors, close the performance gap with the more tech-heavy NASDAQ?

Economics

One of the most interesting things about the current economy is the difference in public perception.  Recent polls indicate people feel worse about the economy since last November.  We wrote last week how people are swayed most by what impacts them most immediately.  But, even as inflationary pressures continue to challenge consumers, the U.S. economy remains the strongest and most vibrant in the world.

The coming election is beginning to play a more significant role in shaping investor views on the financial markets.  There has been some speculation surrounding advisors to former President Trump planning to erode Federal Reserve independence should he be elected to a second term.  While this is something people should be concerned with, it is quite unlikely to become reality as there are many legal hurdles.

Conclusion

Our views on the economy and financial markets haven’t changed much.  The economy appears to be in good shape, and the equity markets have been remarkably strong.  That being said, it should surprise no one if we see an economic slowdown or a market correction, though neither appears on the near-term horizon.

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