August 24, 2024 Market Update

All the major U.S. stock market indexes continued to trend higher this past week after receiving positive news on interest rate cuts from the Fed Chair Jerome Powell.  Paring back most of the losses from earlier this month, the S&P 500 Index is now within the 1% range of its all-time high recorded in July.

The bond market also marched higher as the yields further retreated by 9 bps.  The Vanguard Total Bond Market ETF (BND), which serves as a proxy for investment-grade corporate and government fixed-income securities, rose 0.67% over the course of the week.

If you're considering taking out a mortgage or refinancing an existing one, you might want to hold off for a few more weeks.  There's a growing likelihood that interest rates will decrease soon.

Last week, the Bureau of Labor Statistics made a significant revision to its preliminary payroll data, lowering net payroll gains by 818,000 for the 12-month period ending last March.  While such revisions are common, the magnitude of this adjustment is noteworthy - it’s the largest downward revision since 2009 and is part of a broader trend indicating a cooling economy.

Another worrisome sign is that continuing jobless claims are at their highest since November 2021, and the number of unemployed workers available to fill job openings is declining.

It’s not surprising, then, that the minutes from the Federal Reserve’s Open Market Committee (FOMC) July meeting suggest that a rate cut might be on the horizon.  The minutes showed that most committee members believe it would be appropriate to ease monetary policy at their September meeting, assuming inflation data aligns with expectations.

The August jobs report, due on September 6th, will be a crucial factor in the Fed's decision.  If it confirms that the job market is weaker than previously thought, it is all but certain that the Federal Reserve will start lowering interest rates.  That should be good news for borrowers, and homeowners looking to sell.

That’s all for now.  Have a great weekend and invest wisely my friends.