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Market Watch: S&P 500 Hits 5,000, Inflation Adjusts, Credit Concerns Rise

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Market Watch: S&P 500 Hits 5,000, Inflation Adjusts, Credit Concerns Rise

SPY
S&P 500

Last Week: 1.76%
YTD: 5.45%
1 Year: 24.71%

DIA

Dow Jones Industrial Average

Last Week: 0.82%
YTD: 2.67%
1 Year: 16.42%

ONEQ
NASDAQ

Last Week: 2.40%
YTD: 6.40%
1 Year: 38.14% 

Russell 2000

Last Week: 3.86%
YTD: -0.68%
1 Year: 6.32% 

Large Growth

YTD: 8.78%
1 Year: 41.63% 

Large Value

YTD: 1.11%
1 Year: 7.79%

S&P 500 Hits 5,000

On Friday, the S&P 500 hit a major milestone, closing above 5,000 for the first time in history. The historic closing coincides with investors pricing out a rate cut in March after the Fed’s most recent guidance two weeks ago. We will see how the market reacts to this week’s inflation data when it gets released from January’s report. The Fed has been asking for patience with rate cuts, but that has not stopped the markets from rallying. We are in the middle of earnings season and there continues to be positivity, as 75% of companies who have reported have beaten earnings expectations, according to FactSet data. This is above the 10-year average of 74%. The companies beating expectations have also seen increases of 1.4% over the two days before and after their earnings release. This is almost half a percent more than the 1% five-year average for earnings beats.

Credit Card Delinquencies

Total consumer debt rose to $17.5 trillion in 2023. The U.S. saw credit card delinquencies rise more than 50% last year, as reported by the New York Fed last week. We also saw a rise in delinquencies on auto loans and mortgages. With rising costs due to inflation, it is not much of a surprise to see consumers depleting savings and needing to spend more using credit. Coming out of the Covid-19 pandemic, we saw some of the healthier household budget sheets in history, but for many, they have now gone through much of their savings. The twist on this is the economy is still growing at a steady pace and unemployment remains below the historical average. Economists have pointed to rising interest rates as a factor in the rise in delinquencies, especially on loans.

December Inflation Adjusted

Updated Consumer Price Index numbers show inflation was even lower than originally thought in December. The basket of goods and services used in the CPI measurement showed an increase of 0.2%, less than the 0.3% originally calculated. This is good news for consumers as they wrangle with the credit card spending and depleted savings we have seen. As inflation is getting back to the Fed’s long-term target, they will have to navigate cutting rates without causing a resurgence in inflation.

  • 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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