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.
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.
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
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.
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The S&P 500 Index is a stock market index that tracks the performance of 500 of the largest publicly traded companies in the United States. It is market-capitalization-weighted, meaning companies with a larger market value have a greater impact on the index. The S&P 500 is widely used as a benchmark for the U.S. equity market and provides a broad representation of various sectors of the economy, including technology, healthcare, financials, and consumer goods. It is often used by investors to gauge overall market performance and to compare the returns of individual investment portfolios. This document contains performance data that references the S&P 500 Index (the "Index"). The S&P 500 Index is a market capitalization-weighted index of 500 of the largest publicly traded companies in the U.S., and is widely regarded as a benchmark for the U.S. equity market. Please note that the S&P 500 Index is unmanaged and does not include transaction costs, fees, or expenses associated with the purchase or sale of securities. Unlike the performance of the Fund, which may be subject to fees, the performance of the Index does not reflect the impact of these costs. Index returns are typically gross returns, unless otherwise specified. Past performance of the Fund or its manager is not indicative of future results, and there can be no assurance that the Fund will outperform or track the performance of the S&P 500 Index or any other benchmark. The S&P 500 Index is used solely for comparison purposes and does not reflect any investment strategy or portfolio. It is not possible to directly invest in the S&P 500 Index.
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