Fortis Wealth Management

(888) 336-7847 (3FORTIS)

www.investfortis.com

April 2024
Market Update
(all values as of 03.29.2024)

Stock Indices:

Dow Jones 39,807
S&P 500 5,254
Nasdaq 16,379

Bond Sector Yields:

2 Yr Treasury 4.59%
10 Yr Treasury 4.20%
10 Yr Municipal 2.52%
High Yield 7.44%

YTD Market Returns:

Dow Jones 5.62%
S&P 500 10.16%
Nasdaq 9.11%
MSCI-EAFE 5.06%
MSCI-Europe 4.60%
MSCI-Pacific 5.82%
MSCI-Emg Mkt 1.90%
 
US Agg Bond -0.78%
US Corp Bond -0.40%
US Gov’t Bond -0.72%

Commodity Prices:

Gold 2,254
Silver 25.10
Oil (WTI) 83.12

Currencies:

Dollar / Euro 1.08
Dollar / Pound 1.26
Yen / Dollar 151.35
Canadian /Dollar 0.73

Macro Overview

A stronger-than-anticipated jobs report reduced chances of a rate cut by the Federal Open Market Committee in June. Strong labor dynamics tend to foster underlying inflation for longer periods of time, influencing the Federal Reserve’s decision on rate decreases. Yields on short-term U.S. Treasury bonds rose in March as expectations for a spring Fed rate cut dissipated.

The Federal Reserve signaled that it will likely be appropriate to lower rates at some point this year, with some Fed officials expecting at least three rate reductions in 2024. Markets previously expected the first rate cut in March, which did not materialize due to the Fed’s concern regarding continued inflationary pressures.

Inflation angst affected markets in March as inflation remained a concern. Over the past year, prices rose the most for transportation services, dining out, and housing. Stubbornly high prices on certain goods and services have stalled any immediate efforts by the Fed to commence its rate reduction strategy.

A number of central banks across the globe are expected to cut rates starting this summer, before the Fed embarks on its rate reduction plans. Slower economic growth and lessening inflationary pressures are prompting lower rates throughout Europe in order to sustain economic momentum. The European Central Bank, the central banks of England, Canada, Australia, New Zealand, and Switzerland are all anticipated to begin lowering rates this summer and through the end of the year. 

The Baltimore bridge collapse highlights the fragility of the nation’s infrastructure and the need for proactive contingency planning and diversified routing options. A critical component of the nation’s shipping transit support, the Baltimore Port is the largest U.S. port by volume in handling farm, construction machinery, and agricultural products. It is also the busiest U.S. port for automobile shipments, moving more than 750,000 vehicles in 2023, according to data from the Maryland Port Administration.

Florida passed a law this past month that prohibits minors under the age of 14 from having social-media accounts, regardless of parental consent. The legislation is aimed at curbing social-media access for minors, and requires social-media platforms to cancel accounts and delete all content on the request of parents and minors. The law is scheduled to become effective and enforceable on January 1, 2025. Should other states adopt similar restrictions, the impact may pose a challenge for social-media platforms.

Shrinkflation is when companies sell a smaller or lesser amount of a product, but for the same price. The trend has become common from food products to cars, where consumers are getting less yet still spending the same. Higher production costs, including raw materials and labor, have forced companies to either raise prices or shrink product portions in order to maintain profit margins.

Sources: Maryland Port Administration, ECB, Federal Reserve, Labor Dept., EuroStat, U.S. Treasury

 
Up nearly 3.5% year to date, the U.S. dollar is surging

Equities Continue Their Advance – Domestic Equity Markets

The energy and utility sectors were the primary advancers in March as fuel, natural gas, and electrical costs rose. Technology, real estate and consumer discretionary were sectors that underperformed in March, indicative of a reversal from previous performance trends this year.

Major international and domestic equity indices are positive for the year through the end of March, lifting the price value of markets globally. A strong dollar in 2024 has impacted market pricing dynamics, as U.S. exports have become more expensive for consumers in other countries.

Sources: Dow Jones, S&P, Bloomberg

Rates Remain Stubborn – Fixed Income Overview

Inflationary pressures and better-than-expected employment data pushed rates slightly higher in March, persuading the Fed to hold off on its interest rate reduction strategy. Short-term rates rose as expectations for a spring or early summer rate reduction diminished. Estimates are that the Fed will eventually begin reducing rates in the summer or fall, contingent on forthcoming economic and labor data.

Rates on a 30-year average conforming mortgage ended March at 6.79%, while the average rate on a new auto loan settled at 8.57% for a four-year term. Historically, consumer loan interest rates decline as the Fed initiates interest rate reductions.

Sources: Federal Reserve Bank of St. Louis, Treasury Dept., Freddie Mac

Strong U.S Dollar Prompts Americans To Travel Overseas – Foreign Exchange Update

A strong U.S. dollar is a decisive factor for U.S. travelers heading overseas. Up nearly 3.5% year to date, the surging U.S. dollar is expected to maintain its value as demand for the greenback remains enduring. When traveling to other countries, an elevated U.S. dollar versus other country currencies can make hotels, food and wine, and activities much less costly. As of the end of March, the Euro is down nearly 8% versus the U.S. dollar, making travel to any Euro-denominated country cheaper than in the summer of 2021.

The strengthening dollar has also made imported goods into the United States more affordable, as items purchased in foreign currencies become less expensive for American consumers as the dollar rises. These lower import prices help mitigate inflation in the U.S., allowing consumers to spend less on certain goods even while they spend more on leisure and travel. (Sources: https://fred.stlouisfed.org/, Bloomberg, Commerce Department)

 
the average tax refund so far this tax season is $3,050

Average Tax Refund For 2024 Tax Season Larger Than Last Year – Tax Policy Update

The 2023 tax season, which began January 23, 2024, has so far seen over 90 million federal tax returns filed as of the end of March. The IRS tracks and monitors the number and status of returns to estimate tax revenue and filing timeliness. Refunds are also tracked, projecting the amount of funds owed to taxpayers. Through the end of March, there were over 60 million refunds issued to taxpayers, with an average refund in the amount of $3,050. IRS data reveals that the average refund so far this year is roughly 5% larger than it was for tax year 2022.

In tax year 2022, the Federal Government collected more than $4.9 trillion in total receipts, processed over 262 million returns, and issued over than $641 billion in tax refunds. Budget estimates from the Federal Government project an estimated $4.8 trillion in total receipts for tax year 2023.

Sources: IRS, CBO, Whitehouse.gov

Chocolate Is Getting Expensive – Commodity Overview

Weather and crop disease in geographic regions where cocoa beans grow have hindered crops and stricken supply leading to elevated chocolate prices. Cocoa beans surpassed $9,000 per metric ton in March for the first time ever, with cocoa bean prices more than doubling from the beginning of the year.

West Africa, where most of the world’s cocoa beans are grown, has been hit with poor weather and crop disease, dramatically curtailing cocoa bean production and impacting the production of chocolate globally. The limited production is expected to linger for some time, directly affecting the price of chocolate. Higher sugar prices have also been a challenge for chocolate producers, who use the sweetener as an essential ingredient when making chocolate confections.

Sources: Federal Reserve Bank of St. Louis

 

 
average price of a gallon of regular gasoline rose to over $3.50 in March

Some States Continue To Lose Workers After Pandemic – Labor Market Dynamics

The pandemic brought on dramatic changes to employment trends and labor markets, some of which changes may be substantially lasting. Work-from-home positions are widely accepted and commonplace in certain industries now, as transient workers are migrating from state to state. Many companies today allow their employees to essentially work from anywhere, establishing a true virtual work environment.

Nearly five years after the pandemic, migration from various states has been consistent. California and New York combined lost over half a million workers to other states from 2020 to 2024, while Texas took in one million new workers during the same period. Florida also saw a dramatic increase with over 750,000 new workers flooding into the state. Cost of living, taxes, and housing are among some of the reasons for the migrations.  As a result of the worker migrations, California has seen its unemployment rate rise to 5.3%, the highest in the nation, while New Jersey saw its unemployment rate hit 4.8%.  (Sources: Department of Labor)

Why Gasoline Prices Are Rising Faster Than Usual – Energy Overview

Various factors are contributing to sustained high gas prices, which are expected to add to inflationary price pressures heading into the summer months. Traditionally, gasoline prices move higher as vacation travelers hit the road during the summer months. Transportation companies, railroads, and airlines see enhanced activity during the summer season.  The summer of 2024 may produce higher prices than usual, in the context of continued supply constraints, shipping issues, and increased international demand for U.S. oil and gasoline driven by the Russian invasion of Ukraine the Middle East conflict. The EIA reported that the average price of a gallon of regular gasoline rose to over $3.50 per gallon in March nationally. Rising gasoline prices can present a challenge for both consumers and companies. Companies are forced to pass along the higher costs of fuel to consumers, who in turn spend a larger percentage of their take-home income on fuel. Higher fuel prices tend to filter down to the consumer since the cost of food, household items, and transportation are all affected by rising fuel expenses. Historically, rising fuel prices eventually hinder economic growth, thus slowing industrial and consumer activity and lessening demand for fuel. Economists note that a recession would likely curtail demand for fuel, bringing fuel prices lower. (Sources: U.S. Energy Information Administration)

Market Returns: All data is indicative of total return which includes capital gain/loss and reinvested dividends for noted period. Index data sources; MSCI, DJ-UBSCI, WTI, IDC, S&P. The information provided is believed to be reliable, but its accuracy or completeness is not warranted. This material is not intended as an offer or solicitation for the purchase or sale of any stock, bond, mutual fund, or any other financial instrument. The views and strategies discussed herein may not be appropriate and/or suitable for all investors. This material is meant solely for informational purposes, and is not intended to suffice as any type of accounting, legal, tax, or estate planning advice. Any and all forecasts mentioned are for illustrative purposes only and should not be interpreted as investment recommendations.