The S&P 500 is up through the first 5 weeks of the year, but it has not been without moments of volatility. Leading the charge? Rate cuts – or lack thereof. Coming into 2024, investors were pricing in at near 100% certainty the first rate cut would come in March. Those expectations helped push markets near and then through previous all-time highs. But recent language from Fed members (like Jerome Powell, Fed Chair) suggest rates will stay higher for longer and thus the probability of a March rate cut has fallen dramatically. As the new information is received and digested by market participants, stocks move to price in the new data. In this case, higher for longer rates is not so accommodating to growth as rate cuts would be, so markets react with volatility.
This overall change to expectations shouldn’t come as a surprise – markets are impossible to predict. Inevitably, something will change, or the unforecastable will happen to shake things up. The Mag7 were expected to continue generating exceptional returns and those, too, have quieted. “You have to go down to the 495th ranking out of the 500 stocks in the S&P in order to capture all seven of the Mag7” says Liz Ann Sonders, Chief Investment Strategist at Charles Schwab.
As the markets continue to evolve and new information is learned, we at PDS also continue to monitor portfolios and allocations for potential opportunities in tax loss harvesting and rebalancing. We encourage clients and investors alike to continue following their financial plans and remain long-term investors. The map is not the terrain – the path to completing your goals [financial or otherwise] is not without its ups and downs.
IMPORTANT DISCLOSURE INFORMATION: Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by PDS Planning, Inc. [“PDS”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from PDS. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. PDS is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the PDS’ current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.pdsplanning.com. Please Note: PDS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to PDS’ web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a PDS client, please contact PDS, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.