{"id":7724,"date":"2024-01-08T13:52:08","date_gmt":"2024-01-08T19:52:08","guid":{"rendered":"https:\/\/www.keystonefinancial.com\/?post_type=oi_article&p=7724"},"modified":"2024-01-08T13:52:11","modified_gmt":"2024-01-08T19:52:11","slug":"market-commentary-january-08-2024","status":"publish","type":"oi_article","link":"https:\/\/www.keystonefinancial.com\/articles\/market-commentary-january-08-2024","title":{"rendered":"Market Commentary | January 08, 2024"},"content":{"rendered":"\n
And we\u2019re off\u2026to a slow start.<\/p>\n\n\n\n
Last week, investors appeared to suffer from a New Year\u2019s hangover. The culprit was too much optimism.<\/p>\n\n\n\n
After its December meeting, with inflation easing and the U.S. economy remaining resilient, the United States Federal Reserve (Fed) indicated that three rate cuts were possible in 2024. Assuming the Fed drops rates by 0.25 percentage points each time, the effective federal funds rate would fall by 0.75 percentage points to about 4.5 percent by the end of this year.<\/p>\n\n\n\n
That was welcome news. Lower rates make borrowing less expensive for businesses and consumers. As a result, rate cuts could lead to lower interest rates on home and auto loans, as well as credit cards. In addition, lower rates could boost corporate profits and push stock prices higher.<\/p>\n\n\n\n
Ebullient investors saw the inch and took a mile, extrapolating the possibility of three Fed rate cuts in 2024 to six rate cuts. Jeff Cox of CNBC<\/em> explained. \u201cMarkets\u2026followed up the meeting and Chair Jerome Powell\u2019s press conference by pricing in an even more aggressive rate-cut path, anticipating 1.5 percentage points in reductions next year, double the [Fed\u2019s] indicated pace.\u201d<\/p>\n\n\n\n Investors\u2019 buoyant outlook supported strong third-quarter performance and double-digit returns for major U.S. stock indices in 2023. However, investors recognized they may have taken things too far, and the U.S. stock market retreated for much of last week.<\/p>\n\n\n\n Friday\u2019s employment report didn\u2019t help matters. It confirmed the continued strength of the U.S. economy. Employers added 216,000 jobs in December, surpassing economists\u2019 estimates, according to Megan Leonhardt of Barron\u2019s<\/em>. The unemployment rate remained at 3.7 percent and average hourly earnings were up 4.1 percent over the 12 months through December 2023.<\/p>\n\n\n\n The strong report lowered expectations that the Fed will cut the federal fund rate at its March meeting, reported Karishma Vanjani of Barron\u2019s<\/em>.<\/p>\n\n\n\n Last week, major U.S. stock indices finished the week lower, and the yield on the benchmark 10-year U.S. Treasury note rose.<\/p>\n\n\n\n