CWS Market Review – March 22, 2024
“There’s no shame in losing money on a stock. Everybody does it. What is shameful is to hold on to a stock, or worse, to buy more of it when the fundamentals are deteriorating.” – Peter Lynch
This week, the Federal Reserve decided to do nothing, and the stock market soared to another all-time high. It’s funny how often doing nothing is the best thing to do.
The Fed has now gone five meetings in a row without touching interest rates, and Wall Street seems quite pleased with this strategy. In 21 weeks, the S&P 500 gained 27%. We’re not quite done with Q1, and the S&P 500 is already up 9.9% this year.
The Fed’s post-meeting policy statement was pretty much as expected. The Fed is clearly looking to lower rates, and probably wants to lower rates, just not quite yet. According to the Fed’s latest projections, the central bank sees itself cutting interest rates three times this year.
This is a delicate balancing act. The Fed doesn’t want inflation to come back, but it also doesn’t want to knock the economy into a recession. Traders currently think there’s a 74% chance that the Fed will start cutting in June. That sounds right.
Officially, the Fed’s target for inflation is 2%. While inflation has cooled off from 9% to around 3%, getting rid of that last bit is proving difficult.
In this week’s issue, we’ll take a closer look at what the Fed has to say, and what it means for investors. Not only are interest rates important to the direction of the stock market, but they’re also important to what kinds of stocks lead or lag the market.
We had two off-cycle Buy List earnings reports this week, from SAIC and FactSet. SAIC missed Wall Street’s consensus by three cents per share, and traders took a 10% slide on Monday. Despite the miss, I still like this stock.
On Thursday, FactSet reported very good earnings. It beat Wall Street’s consensus by 9%. However, FactSet cautioned that full-year 2024 results will come in “at the lower end of the guidance range.” I’ll explain it all in just a bit.
I also have some Buy List updates for you. Do you remember how Celanese got pinged after its earnings report last month? Well, the shares have rallied back and just hit a new 52-week high.
Also, a research company just sent a letter to Miller Industries urging them to adopt strategies to enhance shareholder value. One of the directors responded, and…I don’t want to give it away, but it’s colorful. There’s a lot to get to, so let’s start by looking at what the Fed has to say this week.