Technical Review

Good News Is Not Good Anymore

In the second half of 2023 the correlation with the Federal Funds Rate futures (blue line inverted to align with changes in the S&P 500) and the S&P 500 was high. The S&P 500 bottomed in October as the prospect for rate cuts increased (blue line). The S&P 500 marched higher in 2024 even as the number of expected cuts dwindled from 6 to 3 in early April. Investors were able to overcome the disappointment from fewer rate cuts, because the potential for earnings growth was deemed more important than rate cuts. Since the hotter than expected Consumer Price Index (CPI) for...

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