Market Recap: Steady Inflation Meets Income Surge, Bitcoin’s Rally, Q4 GDP Insight

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Market Recap: Steady Inflation Meets Income Surge, Bitcoin’s Rally, Q4 GDP Insight

SPY
S&P 500

Last Week: 1.36%
YTD: 7.90%
1 Year: 28.83%

DIA

Dow Jones Industrial Average

Last Week: 0.15%
YTD: 4.05%
1 Year: 19.39%

ONEQ
NASDAQ

Last Week: 1.73%
YTD: 8.20%
1 Year: 40.76% 

Russell 2000

Last Week: 2.36%
YTD: 2.58%
1 Year: 9.13% 

Large Growth

YTD: 10.61%
1 Year: 44.52% 

Large Value

YTD: 4.21%
1 Year: 12.46%

Key Inflation Indicator

Inflation rose in line with expectations for January. The personal consumption expenditures price index, excluding food and energy costs increased 0.4% for the month of January and up 2.8% from a year ago. This was in line with the analysts’ expectations. When factoring in the more volatile prices of food and energy, the PCE increased 0.3% for the month and 2.4% year over year. This also came in on target with expectations. When examining the measures in the index, service prices increased 0.6% on the month, while the cost of goods fell 0.2%. Services rose 3.9% on an annual basis, and goods were down 0.5%. Energy was down the most, coming down 4.9% from a year ago. The Fed will use these key data points when continuing their discussions on when they may begin lowering interest rates. Many analysts are now expecting them to keep rates higher for longer.

Personal Income Increase

Amidst the inflation rate coming in on target, the increase in personal income came in much higher than expected, rising 1% compared to the estimate of 0.4%. This increase will certainly help bolster household income and balance sheets; however, will they save that additional income or spend it? The goal is to reduce inflation and decrease the supply of money. To do this, the Fed must navigate consumer and government spending challenges.

U.S. GDP Growth

GDP growth in Q4 was slightly lower than the U.S. Department of Commerce initially estimated. In their second estimate, annual GDP rose 3.2% in Q4. This was slightly under the original 3.3% estimate.  It still is a mild slowdown from the massive 4.9% growth from Q3 2023. The updated revision comes from a downward reflection of private inventory investments that was offset by large government and consumer spending numbers.

Bitcoin Rising Quickly

The cryptocurrency, Bitcoin, had its best week in nearly a year. It is now nearing the 2021 all-time high. With the new Bitcoin ETFs, much of the large trading volume is now during the market trading day and no longer on weekends or premarket. Industry experts are warning that there may be a cooling-off period in the Bitcoin space due to the large amount of unrealized gains investors have yet to capture. Long-term investors are confident that the new Bitcoin ETFs have provided easier access and greater demand for cryptocurrency. It remains a volatile field to invest in, seeing daily swings of nearly 5-6% in either direction. 

  • Alex Wolfe

    Alex is a Certified Financial Planner™. He brings nearly a decade of experience working with individuals, families, and business owners. Prior to working for Base Wealth Management, Alex worked for Fidelity Investments and an independent wealth management firm in Venice, FL. Through many years of practice, he specializes in helping clients navigate their financial goals through comprehensive financial planning. He received his bachelor’s degree in economics from Texas A&M University.

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2022 Tax Document Information

As a Base Wealth Management client, you should receive your paper tax documents via mail in the coming weeks. Or, if you previously had an online account with Pershing’s NetX360, you should be able to access your 2022 tax documents through that portal. 

If not, or if you experience any issues, please reach out to Tim O’Brien (tim.obrien@intervestintl.com).

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