Equity Markets End Week Flat, After Fed Hold Rates Steady

Equity Markets End Week Flat, After Fed Hold Rates Steady

Equity markets were relatively flat but ended up for the week. The S&P 500 snapped its string of consecutive down weeks. Overall for the week global equities (represented by the MSCI All Country World Index) finished up 0.74% while domestic stocks (represented by the S&P 500 Index) were up 0.53%.

Federal Open Market Committee (FOMC)

The Federal Open Market Committee (FOMC) met this week, the committee opted to maintain its wait-and-see stance on the economic outlook, leaving its benchmark interest rate unchanged. The Fed’s so-called “dot plot,” which projects participants’ expectations for future rate moves, continued to indicate two additional cuts (50bps total) for 2025, which is generally consistent with the market’s betting odds (calling for 2-3 cuts). The market expects the Fed to remain on hold through its next meeting (May 7th), with an expectation for a June 18th rate cut.

U.S. retail sales

U.S. retail sales came in short of economists’ expectations, posting a weak result for the second month in a row. The government reported on Monday that sales in February rose 0.2%, which was below consensus expectations for a 0.6% gain. In addition, January’s initially reported sales figures showing a 0.9% decline was revised downward to a 1.2% drop.

Share Repurchases Increase

U.S. companies spent nearly 19% more to buy back shares in 2024 than they did in 2023. Share repurchases by companies in the S&P 500 totaled a record $943 billion last year, up from 2023’s $795 billion, according to S&P Dow Jones Indices. On a quarter-to-quarter basis, buybacks rose 7% in last year’s fourth quarter relative to the third quarter.

Looking Forward

For the week ahead, the Personal Consumption Expenditures Price Index is scheduled to be released on Friday. This is important as it is the U.S. Federal Reserve’s preferred gauge for tracking inflation. The most recent PCE inflation report showed inflation rising at an annual rate of 2.5% in January, slightly below the 2.6% figure recorded the previous month.

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.