“Invest for the long haul. Don’t get too greedy and don’t get too scared.”
-Shelby M.C. Davis
Here’s what you need to know this week:
· Stocks rise on inflation reprieve
· The market correction reverses course
· Markets look for clues from the Federal Reserve
Cooler Inflation
Stocks rose last week after briefly dipping into correction territory (more on that in a moment). Investor optimism was bolstered by the release of February’s Consumer Price Index (CPI) report showing that inflation is slowing more than anticipated. The report showed monthly inflation at 0.2% and annualized inflation at 2.8%, both lighter than the 0.3% and 2.9% that analysts expected.
There were also signs of high-profile items experiencing disinflation or even strong deflation. Chief among them was the national price of eggs which has fallen precipitously since the start of the year:
(source: YCharts)
Markets received an additional boost from Congress reaching an agreement on a federal funding bill, averting a potential government shutdown and funding the federal government through September.
Corrected Correction
The S&P 500 did briefly breach 10% below all-time highs, known in finance as a correction:
However, stocks seem to have found a floor right at the 10% mark and have since rebounded. As we’ve discussed the past two weeks, stocks experience a 10% drawdown more than once per year on average. These corrections are simply part of the investing experience and oftentimes even provide strong buying opportunities:
It is also worth pointing out that stocks gained ground to start the year before the selloff. The S&P 500 is currently down roughly 8.5% since February’s high but is “only” down 4.3% on the year. While no one likes seeing their investments decline in value, the chart above makes clear that the real losing move is to give into short-term fear rather than standing firm.
Fed Week
The Federal Open Market Committee (FOMC) will announce their latest interest rate decision this afternoon and there is little uncertainty as to what they will decide. The bond market is currently assigning a 99% chance of no rate cut; however, the bond market has also raised its odds on rate cuts this year and is now predicting three 0.25% cuts in 2025[2].
The more important event will be Federal Reserve Chairman Jerome Powell’s press conference shortly after the rate announcement at 1:30 PM CT. Despite widespread consensus that the Fed will holds rates steady, analysts will closely parse Powell’s words for any clues as to their next move. In particular, analysts are hopeful that Powell will nod towards being more flexible if market or economic conditions continue to deteriorate[3]. Stock market bounces are always most fragile in their early days so this speech has the potential to swing markets in either direction.
What Else
· President Trump held a three hour call to discuss a ceasefire in Ukraine
· Wildfires continue to spark across Oklahoma due to dry conditions and extreme winds
· Mark Carney officially became the Prime Minister of Canada, replacing Justin Trudeau
· Israel broke their ceasefire with Palestine after claiming Hamas broke terms of the ceasefire
· The price of gold rose past $3,000/oz for the first time
· The March Madness college basketball tournament tips off tomorrow
What We’re Reading
Two US astronauts have safely returned to Earth after delays caused them to spend more than nine months on board the International Space Station. Click below to read about their voyage and their daring return home:
What’s Happening Downtown
The Oklahoma Hall of Fame is hosting Spring Thing starting today through this Friday. This event is free to attend and is geared towards family-friendly activities such as crafts, games and potting activities. Click below to learn more:
· https://www.oklahomahof.com/program/spring-thing?mc_cid=633382b61b&mc_eid=71bf387036
To read more from our blog, click here
Written by: Kane Ogle, CFP®
Steve Beck, Kane Ogle, CFP®, Amber Eduvigen, CFP®, Cale Olbert, CFP®, Brett Valentine, Brandon Ingerson, Jenni Hess