Many investors are adjusting their expectations for when the Federal Reserve will start cutting interest rates, but experts believe that this won’t stop stocks from continuing to rise in 2024. Following a surprising increase in consumer prices last month, investors are now only expecting two interest rate cuts in 2024, down from a high of seven earlier in the year. Despite some market volatility in response to the inflation data, stocks have remained strong, with the S&P up around 8% so far this year. Wells Fargo’s chief investment strategist, Christopher Harvey, remains optimistic, pointing out that the Fed is likely to begin a multiyear easing cycle. Market analysts believe that earnings growth will drive stock performance, even if the Fed doesn’t cut rates this year. The focus is not on when the Fed cuts rates, but on the reasons behind the decision. These factors could lead to further growth in the economy and stock market, with a potential shift towards more cyclical sectors.
Vocabulary List:
- Adjusting (verb): Making small changes to something to make it fitcorrector suitable.
- Expectations (noun): Beliefs or hopes about what is likely to happen in the future.
- Interest Rates (noun): The proportion of a loan that is charged as interest to the borrowertypically expressed as an annual percentage.
- Volatility (noun): The degree of variation of a trading price series over time.
- Optimistic (adjective): Having a belief that good things will happen in the future.
- Earnings Growth (noun): The increase in a company profit over a specific period of time.
