History lesson: The Federal Reserve was planning on moving up interest rates another 25 bps to 5.75 percent at the end of 2023. Stocks see daylight at the end of the tunnel and have stopped reacting negatively. Historically, Federal Reserve interest rate hikes have held stocks down, although the December 2015 to December 2018 series of rate hikes to 2.5% did not, perhaps because stocks had been held down for so long after the stock market bubble collapse in 2000. Corporate tax rates were dropped from 35 to 21 percent as part of the Tax Cuts and Jobs Act in December 2017 as well which may have boosted share prices despite Fed tightening.
Stocks rose 23.3% in 2024 and 24.2% in 2023, after the 19.4% drop in 2022 on Russia/Ukraine and Federal Reserve rate hikes to fight the worst inflation outbreak since the 1980s.
Never forget the massive drawdowns in the 2001 recession, 50.5% loss, and 2007-09 so-called Great Recession, 57.7%.
Stock market trend:
The Movie
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By the way, in the way of the usual disclaimers, this is a legal reminder that there is no investment advice offered or given anywhere in these products or on the fwdbonds.com website. These are just the things we would like to see before we save, invest, spend, and otherwise plan for the future, which of course is always uncertain.
