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Insights and Trends: Our Midyear Market Update

By Michael Nedreski

We're already halfway through 2024—how are your finances doing? It's a good moment to stop and consider the economic patterns that are influencing our market and your investment portfolio. Even though we dealt with some hurdles in 2023, (1) the first half of this year has shown us some hopeful signs in important areas.

Let's dive into our midyear market update to help you get ready for the rest of the year and figure out your next financial moves.

Markets Are Up

So far in 2024, financial markets have shown steady, positive performance. While the Dow Jones took a dip in May, the S&P 500 extended its bull market gains into the end of the month.

Around the same time, the Federal Reserve unanimously chose to keep policy rates unchanged (2) for the sixth meeting in a row, and rates have remained steady since the beginning of 2024. That being said, strong inflation numbers (3) from the first quarter suggest that hitting the 2% inflation target might take longer than anticipated. What's more, the U.S. GDP (4) has shown positive but slower-than-expected growth coming out of the first quarter. 

This combination of stable interest rates, persistent inflation, and soft GDP growth suggests that the market may see some cautious optimism (5) but also volatility as investors figure out their next moves. How these factors will shape the stock market for the remainder of 2024 is still largely uncertain.

Employment Remains Strong

As of May 2024, the U.S. employment scene shows steady progress with an unemployment rate of 3.9%, (6) which translates to about 6.5 million job seekers. In fact, many leading economists have noted that the labor market remains strong and stable, (7) offering inflation-adjusted pay raises to the average worker. Additionally, real hourly earnings, (8) which are wages adjusted for inflation, grew by 0.5% in April 2024 compared to the previous year.

GDP Is Soft

Despite facing numerous challenges, U.S. consumer spending remained strong throughout 2023. However, this momentum has started to fade. In the first quarter of 2024, the economy posted an annualized GDP growth of 1.3%, which was slightly below the forecasted 1.6%. (9) Additionally, consumer spending grew by 2%, falling short of the anticipated 2.5%.

For 2024, real GDP (GDP adjusted to remove the effects of inflation) is projected to slow to 1.5% in 2024. (10) Looking ahead, real GDP growth is expected to average 2.0% (11) annually from 2024 to 2027—slightly below last year's prediction of 2.5%.

The Federal Reserve, Interest Rates, and Inflation 

The Federal Reserve has raised its key interest rate to the highest level in 16 years to combat high inflation. After a streak of 11 rate hikes between 2022 and July 2023, (12) the Federal Reserve has continued to hit pause for 2024 while reassessing the current economic growth and inflation. Inflation still remains above the Fed's 2% target, though it remains lower than its peak of 9.1% in 2022. (13) It's yet to be seen whether interest rates, or inflation, will bounce back higher and hamper the economy for the remainder of 2024. 

Global Economies Face Similar Issues

Global growth is projected to continue growing at 3.2% for the remainder of this year and into 2025, (14) the same pace as 2023. The global growth forecast for the five years from now is the lowest we've seen in decades, largely due to the tight policies needed to manage inflation, price instability, and continued geopolitical tensions. Inflation is expected to decline to 5.9% in 2024 and 4.5% in 2025. Despite the cautious outlook, the MSCI All Country World Index is up over 7% so far this year. (15)

Keep Your Finances in Check in 2024

So, you've got a handle on the economic forecast, but what's next? As we move through the remainder of 2023, it's all about being prepared with a smart plan.

Let's talk about your plans for the future: Are you saving enough for retirement? How much can you withdraw from your savings each year without worries? Do your investments match your financial goals and comfort with risk? While we can't predict the moves of the Federal Reserve, Congress, or inflation, we can work to shield our financial future. It's all about crafting a solid, flexible financial plan.

At White Oak Wealth Partners, we're here to help you build a tailored financial plan that steers you toward success. Our flexible approach is designed to help you make the most of any market situation. To get started, contact us by calling 814-835-4551, emailing MICHAEL.NEDRESKI@LPL.COM, or scheduling an appointment here.

About Michael

Michael Nedreski is managing partner at White Oak Wealth Partners, a specialized financial lifestyle and wealth management firm serving entrepreneurs, business owners, executives, and their families. Mike has 30-plus years of experience in the financial services industry and is committed to serving his clients through holistic financial planning, disciplined investment strategies, and proactive personal service. 

A native of Erie, Pennsylvania, Mike began his career in the financial services industry in 1988. He has earned the Chartered Retirement Planning CounselorSM (CRPC®) designation conferred by College for Financial Planning (188-LPL). Mike is also an active member of the Financial Services Institute (FSI) and Financial Planning Association (FPA).

When not working, Mike enjoys spending time with his wife, Amy, and their children. He volunteers in his community and at his church and his children's schools. An outdoors enthusiast, Mike loves hunting, fishing, golfing, and spending time near or on the water. He also enjoys working out and watching some of his favorite sports teams, the Pittsburgh Pirates and the Cleveland Browns. To learn more about Michael, connect with him on LinkedIn.

The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors. Indexes are unmanaged and cannot be invested in directly.

The S&P 500 is a stock market tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Indexes are unmanaged and cannot be invested in directly. (102-LPL)

The MSCI US Broad Market Index captures broad US equity coverage. The index includes 3,204 constituents across large, mid, small, and micro capitalizations, about 99% of the US equity universe. Indexes are unmanaged and cannot be invested in directly. (106-LPL)

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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(1) LPL Financial, 2024, January 3

(2) Capex.com, 2024, May 14

(3) The White House, 2024, May 31

(4) Bea.gov, 2024, May 30

(5) Weekly Market Commentary, 2024, January 29

(6) US Bureau of Labor Statistics, 2024, May 3

(7) CNBC, 2024, April 5

(8) FRED Economic Data, 2024, May 3

(9) Trading Economics, 2024

(10) Congressional Budget Office, 2024

(11) Congressional Budget Office, 2024

(12) CNBC, 2024, March 20

(13) PBS, 2022, July 13

(14) IMF, 2024, April 

(15) Market Watch, 2024,