Private Client Group

June 3rd, 2024

Business Activity Up In U.S. And Europe, Capital Flows Into Stocks And Bonds, New T+1 Rule

Share
Subscribe

In today’s Steady Investor, we look at key factors that we believe are currently impacting the market, and what could be next such as:

• Business activity accelerates in the U.S. and Europe
• Bullish investors piling into stock and bond funds
• What investors should know about the T+1 settlement

Business Activity Accelerates in the U.S. and Europe –Throughout 2023, the eurozone economy struggled to produce growth, ‘muddling through’ the first half of the year and contracting in the second half. The United States economy took a different path, growing solidly throughout 2023 and even accelerating into the final quarter. Now, it appears that the growth gap between the two economic areas is narrowing, with Europe showing signs of gaining strength in Q2 2024. For three consecutive months, eurozone business activity has increased, and in May posted its strongest indication of expansion in over a year. Eurozone Composite PMI, which combines manufacturing and services, rose to 52.3 from 51.7, led by increased activity in German services and manufacturing. The United States also showed acceleration in May, with Composite PMI rising from 51.3 in April to 54.4 in May. The combined strength in economic activity bodes well for global economic growth in the second quarter and also bolsters the possibility that corporate earnings could meet and possibly exceed expectations.1

Are You Protecting Your Retirement Investments?

Picture this: you’ve dedicated years to growing your retirement savings, only to see unpredictable market fluctuations potentially slash your portfolio by half. That’s why having a robust strategy to navigate market volatility is crucial.

Our free guide, How Solid Is Your Retirement Strategy?’ can help you build a retirement strategy that takes the “what ifs” into account. You will also have access to key retirement investment strategies that may help you preserve your financial security in retirement, including:

• The importance of flexible portfolio allocation
• Why keeping some liquid assets can potentially help you preserve more wealth
• Understanding your risk tolerance in case of a market downturn
• Plus, more strategies to help you protect your retirement assets

If you have $500,000 or more to invest, get our free guide by clicking on the link below.

Get our FREE guide: How Solid Is Your Retirement Strategy?2

Fund Flows Show Investors Pouring Capital Back into Stock and Bond Funds –U.S.-based mutual and exchange-traded funds experienced significant outflows in 2022 and 2023. The tides appear to be turning. In 2024 year-to-date, these funds have seen $172 billion of inflows, while assets in money-market funds and other low-risk instruments have leveled off. Globally, fund flows into stock and bond funds have been the highest ever through April, totaling $468 billion. There are two key takeaways here. The first is a reminder that fund flow data is a lagging indicator – it often signals investors increasingly embracing a rally that has long been underway. In 2023, U.S. stocks posted a banner year, recovering strongly from 2022’s bear market and posting over +20% in gains. But investors did not respond last year with increasing equity and bond fund flows – money-market funds attracted more capital. Second, it is likely fair to categorize current rising fund flows as an indication that investor sentiment is becoming more positive. To quote the famous investor John Templeton, “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” In our view, this fund flow data is a sign that investors are being slightly less skeptical and more optimistic, indicating plenty of runway yet for the bull market from a sentiment perspective.3

New Stock Settlement Rule Goes into Effect This Week – The Securities and Exchange Commission (SEC) recently amended a rule regarding trading and settlements, which went into effect this week. Known officially as T+1, the rule puts trade settlements for stocks, bonds, and related assets on a one-day timetable. That means that securities sold must be delivered in one day, and cash from sales will also be made available to investors on the same timetable. This marks a departure from the standard T+2 securities settlement that has been in effect since 2017. For many investors, the shorter settlement cycle provides more convenience and flexibility in trading, but it could also impact investment, trading, and tax decisions.4

How to Protect Your Retirement in This Economy – While there is no way to prevent market volatility, there is a way to protect your retirement assets through market fluctuations. We recommend finding a retirement strategy that takes the “what ifs” into account. Our free guide can help you prepare for what’s to come as you plan your ultimate retirement.

If you have $500,000 or more to invest, get our free guide, How Solid Is Your Retirement Strategy.5 You’ll get valuable and practical ideas to help build a “weatherproof” retirement strategy that can potentially protect your retirement nest egg from any storm that could threaten your financial security.

Disclosure

1 Wall Street Journal. May 23, 2024. https://www.wsj.com/economy/global/eurozone-rebound-continues-apace-as-germany-leads-recovery-surveys-show-fb9438ff?mod=economy_feat2_global_pos1

2 ZIM may amend or rescind the guide “How Solid Is Your Retirement Strategy?” for any reason and at ZIM’s discretion.

3 MSN. 2024. https://www.msn.com/en-us/money/other/bullish-investors-are-piling-into-stock-and-bond-funds/ar-BB1nbj7L

4 Charles Schwab. May 16, 2024. https://www.schwab.com/learn/story/7-things-to-know-about-t1-settlement

5 ZIM may amend or rescind the guide “How Solid Is Your Retirement Strategy?” for any reason and at ZIM’s discretion.

DISCLOSURE

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.

This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.

Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.

Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable.

The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.

Questions posed are for demonstrative and informational purposes only and may not reflect the views of current clients or any one individual.

Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.
READ PREVIOUS
The Impact Of AI On Utilities Stocks
READ NEXT
How Much Of U.S. Consumer Strength Is Based On Borrowing?

Explore Zack’s Archives

View
Mitch's Mailbox
June 20th, 2024
How Much Actual Cash Should I Keep At Home?
Read more
Private Client Group
June 17th, 2024
Hiring And Wages Rise, Fed Sees Just One Rate Cut In 2024, Consumers Feel Better About Economy
Read more
Mitch on the Markets
June 17th, 2024
Is The U.S. dollar Too Strong?
Read more
Mitch's Mailbox
June 13th, 2024
Will Growth Stocks Continue to Outperform?
Read more
Private Client Group
June 10th, 2024
Inflation Update, The ‘Wealth Effect’ And Consumer Spending, OPEC+ Oil Cuts
Read more
Mitch on the Markets
June 10th, 2024
Market Volatility Index Is Very Low—Is It Too Optimistic?
Read more

Daily financial tips directly
from the Zacks family.

Top

Search

Contact

I'm a Private Client I'm a Financial Professional