New Thresholds and Repeat Champs

Last week, the S&P500 finish above 5000 for the first time. This threshold is important for a few reasons, not the least of which is the significant physiological boundary—5000—that was crossed. In bond markets, the odds of a March rate cut plummeted to near 15% on the Fed’s hawkish narrative. This Tuesday brings CPI numbers, which we expect markets to closely watch for any direction on Fed policy.

Last week, economic prints showed surprise in consumer credit1 as lending sharply slowed in December. Only $1.6 billion of non-real estate credit was extended; a sharp let down from $23.5B in November and expectations for $13.9 billion. Wholesale inventories2 in December met expectations and the trend, with an expansion of 0.40%. Initial jobless claims and continuing class tightened showing a slight decrease in displaced workers. Lastly, “Fedspeak” pulled on markets, as Fed Governor Kugler and Fed Governor Bowman gave speeches on Wednesday leading markets to focus on later-than-March rate cut scenarios. This was after FOMC Chairman Powell spoke on 60 Minutes last Sunday starting the week’s hawkish Fed notes.

Weekly Performance

Data Source: Factset®        Performance Period:      2/5/2024    2/9/2024

Regional Banks were in the spotlight last week, as 164-year old New York Community Bank fought for its survival after a bleak earnings report, rating cuts, and reigniting questions of possible contagion. The bank, which last year purchased significant portions of Signature Bank after its failure, found itself in a predicament as the new, larger size of the bank forced it to increase capital reserves and hurt profitability, leading to a dividend cut. The squeeze has left the bank, which holds significant underperforming loans backed by NYC real estate, possibly needing to sell the distressed loans and realize the losses.

With the Chiefs winning back-to-back “Big Games”, Mardi Gras on the 13^th, and Valentines Day on the 14^th, we anticipate this week will be one filled with excitement and celebration for many.  We anticipate similar festivities in the markets, now that we’ve crossed the psychologically important 5000 mark of the S&P500.  In the midst of all of this revelry, don’t forget to take some time to reflect on the beginning of Lent.  “But as for me, I watch in hope for the Lord, I wait for God my Saviour; my God will hear me.” – Micah 7:7.

1. Seasonally Adjusted 2. Seasonally Adjusted, Month over Month. Sources: Yahoo Finance, Reuters.com, and JP Morgan Market Insights. Securities offered through American Portfolios Financial Services, Inc. of Holbrook, New York, 631.439.4600,(APFS), member FINRA, SIPC.  Faithward Advisors is not owned or operated by APFS. Faithward Advisors offers Investment Advisory services through Ambassador Advisors, an SEC Registered Investment Advisor. Dream More, Plan More, Do More is a registered trademark of Faithward Advisors, LLC, Reg. U.S. Pat. & Tm. Off. Any opinions expressed in this forum are not the opinion or view of Faithward Advisors or American Portfolios Financial Services, Inc. (APFS). They have not been reviewed by either firm for completeness or accuracy. These opinions are subject to change at any time without notice. Any comments or postings are provided for informational purposes only and do not constitute an offer or a recommendation to buy or sell securities or other financial instruments. Readers should conduct their own review and exercise judgment prior to investing. Investments are not guaranteed, involve risk and may result in a loss of principal. Past performance does not guarantee future results. Investments are not suitable for all types of investors.