AE Wealth Management: Weekly Market Insights | 12/17/23 – 12/23/23

Weekly Market Commentary

THE WEEK IN REVIEW: Dec. 17-23, 2023

Finishing 2023 strong

With one more week to go in 2023, U.S. equity markets are on a winning streak. Last week got off to a strong start, as San Francisco Federal Reserve Bank President Mary Daly said in an interview with the Wall Street Journal that short-term interest rates would still be “quite restrictive” even if the Fed cuts the federal funds rate three times next year. She also noted that the Fed must be forward-looking and make sure “we don’t give people price stability but take away jobs.”

Richmond Federal Reserve Bank President Tom Barkin seemed to agree somewhat in his comments on Tuesday when he said, “We’re making good progress on inflation. I think that just makes the case to balance the perspective between both sides of our mandate, inflation and employment.”

Still, he said the Fed needs to keep the option of another rate hike on the table if inflation doesn’t continue to come down.

Comments like these have helped boost optimism that we may avoid a recession next year. And the data seems to support this outlook. The core personal consumption expenditures (PCE) index — the Fed’s preferred inflation gauge, which measures prices minus food and energy — rose only 0.1% in November. And overall PCE fell 0.1% in November, its first decline in 21 months.

Other data was also positive last week. The housing market had a little bump, with new housing starts jumping 14.8% in November. The consumer confidence index rose to its highest level since July, while durable goods orders saw their biggest increase since July 2020.

All of this has been a gift to investors during the holiday season. We’re ending the year on a much brighter note than we entered it. If someone had said on Jan. 1 that the S&P 500 would grow by 20% this year, they probably would have looked foolishly optimistic. Yet here we are, with the S&P 500 up 23%, the Nasdaq up 43% and the Dow up almost 13%. It’s proof once again of the importance of overlooking short-term market events and that staying patient usually pays off.

Coming this week

• It’s a short week, and trading will likely be light as people savor the holiday slowdown.
• Data will also be scant this week. We’ll see the bulk of it on Thursday, including initial jobless claims, advanced wholesale and retail inventories, and pending home sales.
• The bond market closes early on Friday ahead of the long holiday weekend.

AE Wealth Management, LLC (“AEWM”) is an SEC Registered Investment Adviser (RIA) located in Topeka, Kansas. Registration does not denote any level of skill or qualification. The advisory firm providing you this report is an independent financial services firm and is not an affiliate company of AE Wealth Management, LLC. AEWM works with a variety of independent advisors. Some of the advisors are Investment Adviser Representatives (IAR) who provide investment advisory services through AEWM. Some of the advisors are Registered Investment Advisers providing investment advisory services that incorporate some of the products available through AEWM.

Information regarding the RIA offering the investment advisory services can be found at https://brokercheck.finra.org/.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

The information and opinions contained herein, provided by third parties, have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by AE Wealth Management.

This information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. None of the information contained herein shall constitute an offer to sell or solicit any offer to buy a security or insurance product.

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