Hope you are all doing well. The major stock indexes slipped on Wednesday following a U.S. Federal Reserve meeting but regained their footing to post gains on Thursday and Friday. The S&P 500, the Dow, and the NASDAQ all climbed more than 1% overall; for the S&P 500, it was the 13th positive result out of the past 14 weeks. Carl Weathers passed away this week and while he made so many great movies. I have chosen to break down this week’s update using quotes from my favorite role of his, Chubbs Peterson in Happy Gilmore.
The labor market continues to be a sturdy as Chubbs’s hand. High interest rates aren’t holding back the U.S. labor market, as January’s jobs gain of 353,000 was roughly double the number that most economists had been expecting. In addition, gains from the previous two months were revised upward by a total of 126,000 jobs and the unemployment rate stayed unchanged at 3.7%. As I have been saying for months now the strong labor market gives the Fed the runway it needs to keep rates higher for longer
The U.S. Federal Reserve seems to have found their happy place for the Fed funds rate. They again kept interest rates unchanged at the highest level in more than two decades and Chair Jerome Powell said that the prospect of a rate cut as soon as March is “probably not the most likely case. Powell indicated that a cut appears likely at some point in 2024 but added that the Fed first wants greater confidence that inflationary pressures will continue to ease. While they aren’t reducing rates as soon as people hoped, the Fed did throw investors something positive by changing the language of their statement indicating they are unlikely to raise rates further as well
The bull run has brought the price of certain stocks like Meta to foolish levels. S&P 500 posted its third monthly gain in a row in January, rising a cumulative 15.5% over that stretch. Last month, the index climbed 1.6% overall and eclipsed its record closing level six times, breezing past the 4,800-point mark on January 19 and then 4,900 ten days later. Meta which was already at an all time high was up over 20% on just Friday.
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