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Weekly Market Recap: March 18, 2024

Weekly Market Recap: March 18, 2024

Posted March 18, 2024
J.P. Morgan Asset Management

The week in review

  • Headline CPI rose by 0.4% m/m and 3.2% y/y
  • Core CPI rose 0.4% m/m and 3.8% y/y
  • PPI accelerated to 0.6% m/m
  • Consumer sentiment fell to 76.5, down from 76.9

The week ahead

  • Housing starts
  • Building permits
  • FOMC meeting

Thought of the Week

After the U.S. economy’s impressive 4% annualized growth in the second half of 2023, investors are searching for clues as to whether this strong momentum will persist into 2024. For much of this quarter, the closely watched Atlanta Fed GDPNow model has forecasted growth of at or above 3%. However, after last week’s retail sales report, estimates were revised meaningfully lower.

Retail sales rose 0.6% m/m in February, marking the fastest gain since September. However, sales for January and December were revised down by 0.5% and 0.3%, respectively. Spending at gas stations rose 0.9%, reflecting higher gasoline prices, while spending at auto dealers and building material suppliers only partially recovered last month’s losses. Importantly, control group retail sales, which are used to calculate GDP and exclude gasoline, autos, building materials and food services, looked bleak, remaining unchanged after a 0.3% decline in January. With control group sales now tracking negative through the first two months of the year, the Atlanta Fed nowcast for 1Q real personal consumption fell from 3.4% to 2.2%, dragging the latest GDPNow estimate for 1Q24 growth down to 2.3%.

Overall, consumer momentum appears to be fading after an impressive 2023. However, as falling inflation and rising real wages offset dwindling excess savings, even moderate consumption growth could carry the U.S. economy to a soft-landing this year. In this environment, stocks could grind higher while bond yields remain relatively stable, although a well-diversified portfolio may best protect against any unforeseen threats that could emerge.

Atlanta Fed GDPNow
Chart and thought of the week sources

Originally Posted March 18, 2024 – Weekly Market Recap

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Past performance does not guarantee future results.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

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