Anticipating Market Stability: Inflation Trends and S&P 500 Projections for Mid-2024

As we approach the middle of 2024, two crucial factors—anticipated inflation trends and historical election year patterns—are poised to shape market dynamics. Tom Samuelson, alongside insights from the Cleveland Fed's Inflation Nowcast, offers a promising outlook for the next few months.

Inflation Outlook

The Cleveland Fed projects modest inflation rates of just 0.1% month-over-month for May and June 2024. These projections are significant as they align with the Federal Reserve's target to reduce year-over-year inflation to 2%. With 'base effects' from previous high inflation rates in late 2023, we anticipate more manageable comparisons in the upcoming months, potentially easing inflation concerns.

Election Year Market Behavior

Historical data suggests a typical rally in the S&P 500 during election years, usually starting in late August. Bespoke's analysis supports this trend, predicting a mild mid-single-digit pullback in the next five months, followed by an upswing. Absent any major disruptions, we are looking at a potential increase to around 5593 on the S&P 500, which would be a 6% rise from the May close of 5277.

*Data sourced from Bespoke

Conclusion

Given these inflation forecasts and traditional election year trends, investors might see a stabilizing market conducive to growth. At Vineyard Global Advisors, we remain vigilant, ready to adapt our strategies to harness potential market opportunities as they arise.

Stay connected for ongoing updates and strategic insights aimed at maximizing your investment outcomes.

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