PUT IN WORK (9/16/2024)

The stock market had a wonderful week, especially relative to the prior week’s performance. The Nasdaq (QQQ) and the S&P 500 (SPY) were elevated in the wake of Wednesday’s inflation data. The former was up 6%, and the latter ended up 4%, with both indices rising every day of the week. Interestingly, however, Wednesday saw stocks down anywhere from 1-2% at one point, and only by close did they end in the green. Indices such as the S&P 500 and the Nasdaq saw up to 4% single-day ranges.

All of that one-day movement can be attributed to the consumer price index report. Investors were initially unsure of what to expect, and the initial news resulted in a harsh downward swing followed by a sudden reversal that carried throughout the rest of the day and then into the rest of the week. The report showed that inflation had fallen to its lowest 12-month rate since February of 2021 and displayed an increase of 0.2% for the month. Core CPI increased by 0.3% for the month, which is a bit higher than the general estimate of 0.2%.

This slight 0.1% discrepancy isn’t precisely what the market wanted to see and likely played a massive part in the sudden albeit momentary downward movement that we saw on Wednesday—investors were hoping for more. But as more inflation data came in and investors were allowed to sit on that information, the market turned around for the better, recouping all those losses and then some. The notion that the Fed will approve a cut of a quarter percentage is larger than ever now, with traders pricing in an 85% chance that this will be the case. No one is entirely certain how the market will react to whatever the Fed decides, but investors are anxious to see. The next Fed meeting will occur Tuesday and Wednesday, September 17th and 18th. Keep an eye out to see what the Fed decides, and watch for any opportunities that might arise from their decision.

(Nasdaq ETF (QQQ) price from September 2023 - 2024 — each candle is 1 week. Chart provided by tradingview.com.)

PORTFOLIO UPDATE

Like the market, our stocks performed incredibly well last week, with some of our smaller-cap stocks seeing gains of nearly 30%. This above-average performance may very well have something to do with investors’ hopes for rate cuts, leading to a potential future where these smaller businesses are able to thrive once more. We plan to hold all currently owned stocks for the foreseeable future. As always, thank you for reading, and happy investing.