In this week’s Steady Investor, we explore current market news that we believe investors should keep on their radar, such as:<\/p>\n\n\n\n
\u2022 Home sales rebounded in January
\u2022 Eurozone draws closer to recovery
\u2022 An update on the Fed and rate cuts<\/p>\n\n\n\n
Is the U.S. Housing Market in the Early Days of a Rebound?<\/strong> 2023 was a slow year for the U.S. housing market. 7+% mortgage rates put a chill on would-be buyers, and also on sellers who did not want to trade in a low mortgage rate for a high one. Existing home sales \u2013 which make up a majority of home sales in the U.S. \u2013 fell to their lowest level since 1995. 2024 looks a bit different so far, with activity picking up in January. According to the National Association of Realtors, home sales rose 3.1% month-over-month in January to a seasonally adjusted annual rate of 4 million, the highest level in five months. Existing home sales were still down year-over-year, but the uptick from December could mark a turnaround for the housing market, especially considering that 30-year fixed mortgage rates dropped below 7% and are expected to fall further as the Federal Reserve eases later in the year. The inventory of homes in the U.S. is still low. But that may also be driving rising confidence among U.S. homebuilders. In February, a survey of homebuilders showed three straight months of improving sentiment, with higher current sales, expected sales, and prospective buyer foot traffic. Improvement in the U.S. housing market is certainly welcome news, but it\u2019s not very actionable for investors. Residential real estate is a small component of GDP, and improving or declining activity does not correlate much with the stock market.1<\/sup><\/p>\n\n\n\n Should Investors Be Afraid of Market Heights? Get Our Insights!<\/a><\/span><\/strong><\/p>\n\n\n\n Interest rates are still high. Inflation is still above target. Many Americans still don\u2019t feel great about the economy.<\/p>\n\n\n\n But fear is no reason to sell. Instead, we recommend gaining more knowledge into what\u2019s happening in today\u2019s market to better guide your investing decisions.<\/p>\n\n\n\n We are offering our exclusive February 2024 Zacks Market Strategy Report<\/a><\/span><\/strong>, where we look at the latest updates from Q4 2023 earnings and what they suggest for 2024. You\u2019ll also get insights on:<\/p>\n\n\n\n \u2022 Has the market gone too high, too fast? If you have $500,000 or more to invest and want to learn more, download your free report today!<\/p>\n\n\n\n Download Our Exclusive \u201cFebruary Market Strategy Guide\u201d2<\/sup><\/a><\/span><\/strong><\/p>\n\n\n\n Eurozone Economy Turns Up, But Germany Still a Drag<\/strong> \u2013 The European economy may finally be turning a corner. A composite index of manufacturing and services activity for Europe, released by HCOB, showed activity rising from 47.9 in January to 48.9 in February, the strongest reading in eight months. To be fair, any reading below 50 still marks contraction, but investors may take respite seeing that activity is at least moving in the right direction. What\u2019s more, the index for services recovered to 50.0, which may be a signal that tourism on the continent is recovering with consumers spending more. Business confidence for 2024 also improved across the eurozone. The weak patch continues to be in manufacturing activity, driven largely by ongoing weakness in Germany. The index reading was 46.1, and industrial confidence in the country also fell. Weak data tracks with Germany\u2019s national economic forecast for -0.2% GDP growth in 2024, a far cry from the previously forecast 1.3% growth. Germany is the powerhouse economy of Europe, so this data may seem concerning to investors. But not to markets \u2013 German equity markets are hovering around all-time highs, likely as they anticipate a rebound later this year or early next year.3<\/sup><\/p>\n\n\n\n The Fed Seems Concerned About Cutting Rates Too Soon<\/strong> \u2013 Last week, investors got a look at Fed minutes from the January 30-31 meeting, and one thing was clear \u2013 most Fed officials are more worried about cutting rates too soon, versus too late. According to the minutes, \u201cMost participants noted the risks of moving too quickly to ease the stance of policy,\u201d while only two officials pointed to the risks \u201cassociated with maintaining an overly restrictive stance for too long.\u201d This cautious sentiment among Fed officials aligns with our thinking that the market seems to be a bit too optimistic about the timing and magnitude of rate cuts in 2024. At the outset of the year, the market was pricing a more than 50% likelihood for rate cuts starting at the March meeting, but that timeline has now been pushed back to June. Fed officials were careful not to come across as hawkish, however, in reiterating their view \u201cthat there had been significant progress recently on inflation returning to the committee\u2019s longer-run goal,\u201d and that \u201cthe policy rate was likely at its peak for this tightening cycle,\u201d according to the minutes. With inflation running at roughly 3% year-over-year, and the Fed funds rate still at a range between 5.25% and 5.50%, rate cuts are arguably imminent. The market\u2019s just been wrong about timing.4<\/sup><\/p>\n\n\n\n What\u2019s Next for the Market<\/strong> \u2013 Investor concerns linger due to high-interest rates and inflation. But, what\u2019s next for the market?<\/p>\n\n\n\n
\u2022 A look at the inflation question in the months ahead
\u2022 Q4 2023 earnings updates and a look ahead to 2024 earnings
\u2022 And much more!<\/p>\n\n\n\n