Dow is Up

The Dow Jones Industrial Average index made a new all-time high this week, outpacing the prior record established January 2022. This index tracks the market value of 30 large, publicly traded companies based in the United States. The Dow, now up over 14% for the year, serves as one indicator of market performance.

Consumer Prices are “Less Up” than Last Year

Year-over-year inflation as measured by the Consumer Price Index (CPI) is 3.14%, down from this summer and down from the 2022 highs of 9+ percent. A decline in energy prices has been a large factor in recent inflation levels. For example: gas prices are now averaging around $3.25 per gallon, a big drop compared to September's $4.00 price level.

Consumer Spending Up + Costco Up

Costco, a global mega retailer, has beat earnings expectations for fiscal Q1 2024. The retailer’s board recently announced a special dividend of $15 per share. The wholesale club saw its stock price rise in 2023 alongside increased retail and food spending.

Me: Can I get a rotisserie chicken for around $5?

Costco: Yep. Sure can.

Me: Looking for an 85-inch TV.

Costco: We got you.

Me: How about four new tires, installed?

Costco: You’re not going to believe this.

Fed Rate is Level

The Federal Reserve keeps key interest rate unchanged and foresees three rate cuts next year. The Effective Federal Funds rate is currently at 5.33%, which is the highest we’ve seen in more than 20 years.

Fed Up, Fed Down

The Fed held a press conference indicating lowering Fed Funds rates in 2024. Chair Powell stated on Wednesday, “We’re talking about the timing of easing.” Markets rallied on this dovish stance. Since then, the New York Fed President appeared to walk it back, stating Friday they “aren’t really talking about rate cuts.”

Vector’s Perspective

Indicators, Fed-speak, and short-term sentiment trackers are helpful directionally and at times can play a part in asset allocation and planning. The much larger and more significant consideration is how you plan to spend your time and use your money. Not just today but looking out five, ten, and 15 years ahead.

You’re not going to believe this (see Costco meme above), but at Vector, we advocate for planning and portfolio design using a bucket-based approach. Blending a mix of stability for the short-term needs, and growth opportunities for the long-term.

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