From Nasdaq MarketSite:

1. Late last year, concerns about a potential economic downturn were balanced by strong Q4 GDP and retail sales, suggesting a “soft landing” scenario. The Fed left options open, preferring to hold off on rate cuts until sustainable inflation towards the 2% target is assured. However, the market projects a 35% chance of a March cut.

2. With 35% of S&P 500 companies reporting Q4 earnings, the average growth rate stands at (1.0%). Energy and Health Care stocks saw notable EPS and top-line improvements, while revenue growth was led by Communications, Real Estate, and Consumer Discretionary companies. The forward 12-month PE for the S&P 500 is 20.8.

3. After increased volatility in Fed rate expectations, the curve steepened with the 30-year yield surpassing 4.40%. Oil rebounded while the dollar rose by 2.3%. Market debates persist amid ongoing strength in economic data and resilient consumer activity.

4. Looking ahead – key inflation data in February will influence the FOMC’s decision on when to cut rates. Additionally, the market is keeping a close eye on potential fallout from the collapse of the Chinese real estate market, particularly with China Evergrande’s liquidation and the pressure on Country Gardens.

Information is provided for informational and educational purposes only. No investment advice is provided, and advice from a securities professional is recommended.



Read more: January 2024 Review and Outlook