The first quarter of 2024 was a positive one for Wall Street. However, markets have since soured as investors lost confidence in the prospect of multiple interest rate cuts this year. Hot inflation data has pushed the Federal Reserve’s highly anticipated rate cuts further out in the calendar, while geopolitical chaos has investors on edge.
Still, there is a silver lining: the US economy remains strong, and the Fed appears to be done raising interest rates. So, how should an investor weigh the pros and cons?
April’s turbulence, combined with this still-constructive backdrop for risk-taking, points to an increasingly complex investing environment,” wrote Michael Arone, SPDR chief investment strategist at State Street.
As the situation has changed and fewer rate cuts are expected, the S&P 500 has reclaimed leadership from mid- and small-cap stocks. But I believe the Fed will cut rates later this year, and as rates begin to fall, things will revert. It has historically served as a catalyst, and I believe it will continue to do so. So, as an investor, I may not know when the Fed will cut rates, but I am confident that it will happen, and why not buy the stocks when they are slightly out of favor and less expensive than large-cap stocks? It allows me to diversify away from the Magnificent.
Also Read:
Changes in Geopolitics will Affect Investment Strategies
Ajman’s Tourism Industry Generated 7% More Revenue in the First Quarter
