Markets Are Up. Inflation Is Down. What's Next?
What's next for markets and the U.S. economy? How do we profit?
“All The Way Up,” Or Nah?
Last week, stocks had their best week of 2024—especially tech stocks.
I’m sure it’s no surprise that with all the hype over Artificial Intelligence, NVIDIA was among the biggest winners. Apple and Meta investors had a good week, too.
NVIDIA was up more than 17%
Apple saw a gain of more than 4%
Meta added nearly 3%
The question is — will stocks continue to rise, or is the gain short-lived?
No one has the answer, but here are things to consider:
Fed chair Jerome Powell is expected to cut interest rates in September. The cut will likely boost investor sentiment in the short term, which can cause markets to continue rising.
However, data also shows that September has been the market’s worst-performing month since 1928. If history is any predictor of the future, another market decline could be right around the corner.
This is an election year. Historically, markets see massive volatility during election seasons. The election could counter the effect of rate cuts (if there are any) and put downward pressure on markets.
Is Jerome Powell Cutting The Bull Interest Rate?
In 2022, the Federal Reserve increased the Fed funds rate (a specific interest rate that affects all interest rates) and vowed to keep it high until inflation fell to normal levels.
We got the inflation numbers last month, and the annual rate dropped to 2.9%. It’s the first time inflation has been below 3% since 2021.
Now that inflation has completed its part of the deal, everyone is waiting for Fed Chair Jerome Powell to do his part and cut interest rates.
How would a rate cut help the economy?
A lower Federal funds rate typically means better mortgage rates for homebuyers, lower interest on auto loans, and more.
Businesses will also be able to borrow money at much cheaper rates. This will encourage them to invest in otherwise costly projects, hire employees, and more.
We’re all crossing our fingers, eager to see what Jerome Powell does in September.
Hypothetically Speaking…
If you’re not already invested, you might ask if it’s too late to invest in companies like NVIDIA, Apple, and Meta.
I’m no financial advisor, so if we’re “hypothetically speaking,” my answer is no.
We’ve all heard the saying, " Time in the market beats timing the market.”
So, when to buy stocks doesn’t matter (unless you’re a trader) because, historically, the market increases over time. The question is, how long can you stay invested until it does?
No one can tell you when the market will rise again after a decline. However, history says that eventually, it will rise again.
If you’re a long-term investor who wants to own profitable companies, it’s never too late to invest — again, “hypothetically speaking.”
But if you want to profit from short-term investments, keep reading.
Tools and Resources
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