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2024 Outlook: Fed Stays the Course

2024 Outlook: Fed Stays the Course

April 09, 2024

When you see hypothetical examples of stock market performance, the illustrations often use average annual returns of between 8% and 10%. But how often does the stock market return between 8% and 10%?

Only four times in the past 76 years.1

Through March 22, the Standard & Poor’s 500 index had gained 10% year-to-date. So does that mean you should expect an “average” year?2

At its March meeting, Fed Chair Powell said the Fed still anticipates cutting short-term rates three times this year. That move boosted investor confidence in the short term and may help boost longer-term confidence, too.3

For example, lower interest rates can help the overall economy as the trend often emboldens CEOs to make long-term capital investments, which helps set the groundwork for future growth.

When will the Fed make its first move? As you can see from the table, more economists are starting to believe it’s a late 2024 decision. But remember, the stock market is a discounting tool, meaning it’s looking 6 to 9 months into the future. So, today’s S&P 500 is seeing business conditions in the October-to-December timeframe.

Stock prices are off to a solid start in 2024. But that shouldn’t have you rethinking your strategy. Remember, we created your investment approach based on your goals, time horizon, and risk tolerance. Unless one of those has changed, let’s stay the course.

1. Finance.Yahoo.com, March 25, 2024
2. YCharts.com, March 23, 2024. The S&P 500 Composite Index is an unmanaged index that is considered representative of the overall U.S. stock market.Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.
3. CNBC.com, March 20, 2024. “Fed holds rates steady and maintains three cuts coming sometime this year.”