Equity Markets Break Four-Week Slide

Wall Street saw a weekly gain for the first time in four weeks. Federal Reserve forecasts of two more interest rate cuts this year (see below) helped renew investor confidence. Each of the major benchmark indexes closed higher last week, led by the Dow, which gained over 1.0%. All 11 of the S&P market sectors advanced, led by financials, health care, industrials and information technology. Bond values rose higher, dragging yields to their lowest levels in more than two weeks. Despite ticking lower at the end of the week, gold prices rose over 1.2%. Considered a safe-haven asset, gold prices have enjoyed 16 record highs this year, reaching an all-time peak of $3,057.21 per ounce on Thursday. Since January 2024, the price of gold has risen 45.0%, or about $1,000.00 per ounce.

FOMC Held Rates Unchanged

In a move that was expected, the Federal Open Market Committee decided to keep the target range for the federal funds rate at its current 4.25%-4.50%. In support of its decision, the Committee noted that economic activity continued to expand at a solid pace, the unemployment rate stabilized at a low level and labor market conditions remained solid. However, inflation remained somewhat elevated, and uncertainty around the economic outlook has increased. Moving forward, the Committee will take into consideration a wide range of information, including readings on labor market conditions, inflation pressures and expectations, and financial and international developments. As such, the Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals of maximum employment and inflation of 2.0%. The latest projections from the Committee indicate two more interest rate cuts later this year.

Eye on the Week Ahead

The final estimate of gross domestic product for the fourth quarter is available this week. The economy expanded at an annualized rate of 2.3% in the fourth quarter, according to the second estimate. The latest Personal Income and Outlays report for February is also out this week. January data showed that consumer spending, a main driver of the economy, declined 0.2%, while consumer prices rose 0.3%.