Today, we are taking a midyear look at the financial markets for 2024, focusing on key metrics and trends influencing our investments and financial decisions.

As of our recording date of July 2nd, the S&P 500 has impressively risen over 15%, currently standing at 5,495. Bruce explains that the price-to-earnings (PE) ratio is at 20.99, indicating a slightly higher but not alarming level compared to historical averages. Jason adds that a pullback is possible despite the market’s strong performance, though they remain optimistic about the market’s upward trend through the year’s end.

We delve into the resilience of major companies within the S&P 500, such as Nvidia, Apple, and Microsoft, collectively representing a significant portion of the index. Jason discusses how these companies’ consistent earnings and product demands are likely to sustain their growth, despite potential short-term pullbacks, providing a sense of stability to our investments.

Regarding annual returns and intra-year declines, Jason notes that typical market behavior includes pullbacks, even in strong years. This year’s largest drawdown is 5%, but overall, the market is up 15%. I emphasize the potential benefits of long-term investment strategies, suggesting that market volatility can be advantageous if investments are not sold prematurely, instilling a sense of optimism in our investment approach.

On consumer finances, Jason highlights signs of financial stress due to inflation, particularly for lower-income households. Despite this, household debt service ratios remain historically low at about 9.9%, indicating relative financial health compared to the past four decades.

However, savings rates are under 4%, a concerning drop from previous years. We stress the need for prioritizing savings as part of financial planning, noting that inflation and higher living costs are squeezing household budgets. By prioritizing savings, we can empower ourselves to navigate these financial challenges more effectively.

Inflation remains a significant issue, with ongoing impacts on various sectors, especially those sensitive to interest rates like real estate and finance. I point out that inflation is proving challenging to control despite the Federal Reserve’s high interest rates. Oil prices, for instance, are still rising, complicating efforts to stabilize the economy.

Interest rates influence investment strategies, shifting preferences within portfolios. Jason notes that higher interest rates can benefit fixed-income investments while still posing challenges for businesses and consumers. Companies are grappling with higher costs and interest payments, which affect profit margins and necessitate selective investment strategies.

As we wrap up part one of our midyear review, it’s clear that inflation and interest rates remain pivotal topics. We’ll continue this discussion in part two, examining additional financial trends and providing more insights for navigating the rest of 2024.

For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit them online at https://www.hoslerwm.com/

Or call them in their Prescott office at (928) 778-7666 or their Scottsdale office at (480) 994-7342.

For more podcast episodes, visit our podcast website at https://hoslerwm.com/protectingwealthpodcast/

Limitation of Liability Disclosures: https://www.hoslerwm.com/disclosures/#socialmedia

Copyright © 2022-2024 Hosler Wealth Management LLC, All Rights Reserved. #ProtectingWealthPodcast #ProtectingandPreservingWealthPodcast #HoslerWealthManagement #BruceHosler