The Federal Reserve Board meets next week to determine its next policy move. Consequently, all eyes are on the Fed and it seems safe to say that stock market participants are fixated on the next Fed move. Presently, according to data provided by the CME Group, the bond market is pricing a 73% chance of a 25-basis point rate cut and a 27% chance of a 50-basis point cut.

The stock market has stalled since mid-summer as it sorts out the mix of news related to the threat of recession, corporate earnings growth, inflation data, and Fed rate policy trajectory. It’s a lot to sort out with significant cross currents and uncertainties. This is the stock market as measured by the S&P over the past three months.

While the market might presently be fixated on the Fed, we think after next week’s meeting, the focus will shift to earnings. Our view continues to be that the consumer, the broader economy, and prospective corporate earnings growth are all stable and on track. Thus, our view is that after a period of uncertainty and choppy stock market behavior, we can break to new all-time highs in the fourth quarter of 2024. Of course, there are always uncertainties present. We note there is growing weakness in the employment data and oil prices are moving lower, suggesting a burgeoning economic slowdown may be presently manifesting. If it does manifest, there will be more volatility and consolidating stock prices. However, currently, we remain constructive on stocks and think positive economic activity will persist in this election year.

DISCLOSURES

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which Investment(s) may be appropriate for you, consult your financial advisor prior to investing. Information is based on sources believed to be reliable, however, their accuracy or completeness cannot be guaranteed.

The S&P 500 Index, or Standard & Poor’s 500 Index, is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. The S&P 500 index is regarded as one of the best gauges of prominent American equities’ performance, and by extension, that of the stock market overall.

No investment strategy can assure success or completely protect against loss, given the volatility of all securities markets. Statements of forecast and trends are for informational purposes and are not guaranteed to occur in the future. All performance referenced is historical and is no guarantee of future results. Securities investing involves risk, including loss of principal. An investor cannot invest directly in an index.