Chris Jones presents our March video market update and shares what FSA is doing to respond.
Stock Market Update Transcript
Hi, everyone, I’m Chris Jones, trader here at FSA, and here’s this month’s market update.
The month of February was filled with record-breaking performances as all three major indices topped their all-time highs. Most notably, the S&P 500 broke above the 5,000 level after hitting resistance at around the 4,800 level in December of ’23 through January of ’24. The prior high was hit back in late 2021, so it has taken over two years for the S&P 500 Index to break out to new ground. Japan’s Nikkei Index finally surpassed its 1989 all time high this past month. That’s right, it took almost 35 years for the Japanese stock market to eclipse the high it reached in late 1989. According to BlackRock, while the yen’s weakness has helped the value of the Japanese corporate earnings made abroad, the market’s outlook also remains positive because of higher inflation that is letting firms raise prices and protect margins as wage growth fuels consumer spending.
In news of other assets, Bitcoin was up around 44% for the month of February. In our most aggressive strategy, we currently have an allocation of the portfolio invested in a Bitcoin ETF that invests in futures contracts but not directly in the cryptocurrency itself. The price hit 62,000, which is just about 10% shy of the all-time high of 69,000 in November of 2021. Much of the gain here can be attributed to the upcoming halving event. Bitcoin halving events occur about once every four years. In short, the reward that miners receive for validating and confirming transactions in the network is halved. The Bitcoin halving event often sparks significant interest and speculation within the cryptocurrency community and beyond. It is viewed as a key factor influencing the economics of Bitcoin, potentially impacting its price due to reduced supply of new coins entering circulation.
Historically, each halving event has been associated with a bull market cycle for the coin, although exact relationships between halving events and price movements is subject to debate among most analysts.
Between the overall markets and Bitcoin posting strong returns in February, there’s lots of euphoria going around. With that said, you never know when the other side of the mountain will come. That’s why at FSA we utilize the FSA Safety net as our strategy. We know that it’s not what you make but what you keep that truly matters.
As the market continues to perform well, investors are increasingly optimistic of the chance that the Federal Reserve will be able to successfully achieve the goal of a soft landing.
The markets will be closely watching the trajectory of interest rates, driving anticipation for the foreseeable future. As of the last meeting in January, the Federal Open Market Committee opted to maintain the interest rates of their current range between 5.25 and 5.5%, its highest target range in almost 22 years. The consensus is that rates will remain unchanged in the next meeting later in March.
Fidelity posted a report that the number of 401(k) millionaires has increased 41% from last year. This is thanks to strong performances in stocks and bonds in 2023, coupled with steady savings rates and employer matched contributions. That being said, a strong market in 2023 was not the only factor for the increase. Fidelity said that 27% of plan participants proactively increased their contribution rate throughout the year. And 78% of 401(k) savers were contributing at a high enough rate to get their full employer matching contribution.
If you would like to be a part of this 401(k) millionaire club, talk to your financial advisor at FSA. And let them know of any changes in your life so we can best adjust how we manage your money.
This has been Chris Jones, trader at FSA. Thanks for watching this month’s market update.
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