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The U.S. economy has grown steadily in the face of persistent inflation and elevated interest rates for the better part of two years. Nonetheless, with the midyear now upon us, there is a sense of uneasiness among many investors about how the economy will fare going forward.
At the start of the year, there was widespread anticipation that the Federal Reserve would initiate a series of interest rate cuts in 2024. However, the Fed now appears ready to hold rates steady until inflation nears its 2% inflation target. Still, while inflation and interest rates will ultimately hold the key to the economy’s trajectory, there is optimism the U.S. economy will continue to generate positive growth.
Looking at the financial markets, robust earnings fueled by mega-cap growth stocks are expected to continue leading the S&P 500 Index, while mid-cap and small-cap indices may see modest gains in the current interest rate environment. Fixed income markets have underperformed year-to-date, yet we believe the current yield backdrop supports an allocation to longer-duration bonds. In addition, qualified investors may find intriguing opportunities within alternative investments.
Investors face many complexities as they attempt to find their way forward in today’s evolving economic environment while keeping sight of their long-term financial goals.
With this perspective in mind, Commerce Trust presents its 2024 Midyear Economic and Market Outlook: Navigating Shifts in the Economic Landscape.
