Stocks Went Down

I haven’t written about the stock market a lot this year. I spoke about it four times a week, but I haven’t put much pen to paper, so to speak. Telling people to chill out on the way down is more my speed than telling them to pump the brakes on the way up. That’s just how I roll. I do my best work when prices are falling.

Today was a washout. Every S&P 500 sector was red. 483 stocks in the index fell today. Its 2.95% decline was the worst day since the Yen carry trade exploded in August. Mortgage rates are back above 7%, and homebuilders are not happy about it. They’re (XHB) in a 14% drawdown, the largest correction of the year. The Russell 2000 gave back all of its post-election rally. Today sucked. And it sucked for a good reason. We had a hawkish cut from the Federal Reserve. Exhibit A, below.

The economy is too strong. During Powell’s presser, he said, “Most forecasters have been calling for a slowdown in growth for a very long time, and it keeps not happening.” The economy won’t slow down, and the last mile of the inflation battle is proving difficult. They’re now predicting just two interest rate cuts in 2025. Stocks did not like that.

After today’s decline, the S&P 500 is up…24.6%. The equal weight version (RSP) is up 12%. I understand those gains are written in pencil, not Sharpie, but I present them to provide context. It’s been an incredible year for the stock market. Two years, really. Nothing goes up forever. And nothing is better for a bull market than the re-emergence of a wall of worry. We need bad days to have good days. It really is that simple.

If today got you spooked, or you feel like talking to someone about your financial future, we’re standing by. We serve clients at every level of wealth. Reach out to us.