Zacks Investment Management

In today’s Steady Investor, we examine the important factors affecting the market and what might lie ahead, including:

• March’s inflation report
• The high cost of homeownership
• The cost of missing tax season

All Eyes on March’s Inflation Report – The Labor Department released March data for the consumer price index (CPI), which sent the stock market into a volatile trading session. It was reported that prices rose 3.5% year-over-year in March, which was slightly higher than economist expectations and marked an acceleration from February’s 3.8% print. On a month-over-month basis, the Labor Department reported that prices rose 0.4%, which was 0.1% higher than the street was expecting. March’s inflation data sent markets into a flutter of shifting expectations about rate cuts in 2024, which many believe may not occur until September. Narratives in the financial media this week flagged this CPI report as troublesome, mostly because of the notion that rate cuts would be pared back and/or delayed as a result. But as we’ve written before, the fate of the bull market and economic expansion do not lie solely in the Federal Reserve’s hands. Many seem to forget that 2023’s better-than-expected economic growth—and the strong market rally that accompanied it—took place while interest rates were still moving higher. The economy has already proven it can withstand higher rates, and we also do not buy into the idea that inflation could head in the wrong direction this year. The consumer price index is known for having an outsized weighting on ‘shelter costs,’ which make up roughly a third of the index. The Fed’s preferred measure of inflation has come in below 3% and will be released later in the month. We see that gauge trending towards 2% as the year progresses.¹

You Can’t Eliminate Volatility, But Here’s How You Can Deal with It

An inevitable aspect of investing is grappling with market volatility, which can feel unsettling.

By diversifying your investments and staying calm, you can navigate volatility and grow your money steadily. Today, we are offering our free volatility guide, which provides insights and tips to do just that. It answers questions like:

1. Market downturns can and will occur, but what should you do?
2. How can diversification help you manage volatility without compromising your returns?
3. When volatility is too much for you to handle, how can a money manager help?
4. Can volatility actually be an opportunity?

If you and $500,000 or more to invest and want to get answers to the questions above, click on the link below to download this guide today!

Download Zacks Volatility Guide, “Helping You Manage Market Volatility.”²

The High Cost of Homeownership – The National Association of Realtors reports that home-buying affordability is at its lowest level since 1985, when mortgage interest rates were still in the double-digits and had at one point reached 18%. Current mortgage rates are nowhere near those levels, of course, but it’s the cost of everything else that has risen dramatically in recent years—home maintenance costs, homeowner’s insurance, property taxes, and utilities. According to a home-improvement company called Thumbtack, it costs over $6,500 a year to maintain a home, up 8.3% from 2022. Homeowner insurance prices have also been surging, as more Americans find themselves living in areas where flood, fire, and other natural disasters are occurring more frequently and with higher intensity. Insurance premiums have risen by about 20% over the last three years, with average annual rates climbing past $2,300. Property taxes have also been going up. According to real-estate data firm Attom, the average property tax for a single-family home in the U.S. was $4,062 last year, up over 4% from 2022. All told these non-mortgage costs account for more than half of a homeowner’s overall annual costs, and it’s been pinching household budgets.³

Tax Day is Right Around the Corner. Missing It Could be Costly – It’s everyone’s favorite time of year: tax season. 2024 is shaping up to be different from past tax years. The IRS estimates that 19.4 million Americans will request an extension, which is nearly a record high. For context, in 2014 only 12.5 million Americans requested extensions. In some cases, extensions were granted by the IRS for people living in areas affected by natural disasters. But many Americans simply do not get their taxes done on time or may request more time because of a high tax balance owed. At the very least, Americans should request an extension if they’re not able to get their taxes in by the 15th, and it’s also wise to make some form of payment in the process. For individuals, failure to file triggers a 5% penalty for unpaid taxes each month, capped at 25% of the total.⁴

This week brought to the forefront a few factors that could affect your investment portfolio. However, the biggest challenge may lie in how investors choose to react to current market volatility.

It is important to remember that volatility is a normal part of the ebb and flow of the markets. The key is not to look for ways to eliminate it, but to develop a mental approach to dealing with it. Our guide, Helping You Manage Market Volatility⁵, provides insights and tips to do just that. It answers questions like:

1. Market downturns can and will occur, but what should you do?
2. How can diversification help you manage volatility without compromising your returns?
3. When volatility is too much for you to handle, how can a money manager help?
4. Can volatility actually be an opportunity?

If you and $500,000 or more to invest and want to get answers to the questions above, click on the link below to download this guide today!

Disclosure