New Year Hangover
Stocks got off to a rough first week of the new year, with tech names leading the week’s decline. Several market observers called it the “reverse Goldilocks” effect, where the market decided investors were getting a little too excited over the prospect of a Fed rate cut. Stocks bounced up and down each of the four trading days but ended each one down—except Friday, when the Dow Industrials, Nasdaq Composite, and S&P 500 all ended the day in the green when jobs data helped soften the week’s slide.
All About the Fed
On Wednesday, manufacturing news came in better than expected, lifting markets until the December Federal Open Market Committee meeting minutes were released, revealing that the Fed members had discussed rate cuts for 2024 but in no specific terms. Jobs and services sector news painted a better picture of the economy on Thursday, but as the 10-year Treasury hit 4%, stock prices responded negatively.
Jobs Data in Focus
Finally, employment data helped buffer the week on Friday, as employers added 216,000 new jobs in December, besting estimates from economists and surpassing the 173,000 jobs added in November. News of unemployment remaining steady at 3.7% also helped sentiment.
This Week: Key Economic Data
Tuesday: International Trade in Goods.
Wednesday: EIA Petroleum Status Report.
Thursday: Jobless Claims. Consumer Price Index. Treasury Statement.
Friday: Producer Price Index.
This Week: Notable Companies Reporting Earnings
Monday: Jefferies Financial Group (JEF)
Tuesday: Albertsons Companies (ACI)
Wednesday: KB Home (KBH), Rite Aid Corporation (RADCQ)
Thursday: Infosys (INFY)
Friday: UnitedHealth Group Inc (UNH), JP Morgan Chase & Co (JPM), Bank of America Corporation (BAC), Wells Fargo & Co (WFC)
The markets started 2024 off with a whimper and it isn’t surprising. A flip of the calendar doesn’t resolve interest rates or the upcoming elections. I don’t think we will see any rate cuts at the end of January Fed meeting, but perhaps March is a possibility. The markets like lower rates and more liquidity but remember if the Fed is cutting it is because something is beginning to slow. That could give the market a little room to pause and reassess. Additionally, we are in the midst of an election year and all the joy that brings. While I don’t think the wheels come off by any means, I do think we’ll get some stagnation or back and forth in the markets. Ultimately, once the election is resolved markets typically respond well. That’s a long way off for now though. Seasonally, we are in the strongest part of the year and the market is close to its all-time highs. It wouldn’t surprise me to see them taken out before we begin to feel the effects of the election and Fed rate cut hullabaloo.
One last thing. Retirement account contributions increased this year, so if you’re saving for retirement and are wanting to max out your contributions, you can increase them this year.
The IRA contribution limit for 2024 is $7,000 for those under age 50, and $8,000 for those age 50 or older. You can make 2024 IRA contributions until the federal tax filing deadline for income earned in 2024. This is up from 2023’s limits of $6,500 for those under age 50, and $7,500 for those age 50 or older. You can make 2023 IRA contributions until your April 15th federal tax deadline for income earned in 2023.
You can contribute up to 25% of the employee's total compensation or a maximum of $69,000 for the 2024 tax year, whichever is less. That’s up from $66,000 in 2023. If you're self-employed, your contributions are generally limited to 20% of your net income.
401k and the like
You can contribute $23,000 (up from $22,500 in 2023) and if you’re over age 50 and additional $7,500.
Make it a great week and stay tuned…