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Friday, January 5, 2024



CLICK HERE for complete 2024 Outlook report. 

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Ed. Note:
Edward Jones is the long time financial advisor to

GUEST BLOG / By The Investment Strategy Team at Edward Jones & Co.--After more than a decade of stocks traveling a path paved by historically and persistently low interest rates, higher yields have driven a winding road for market returns in recent years. 

 In 2024, we think markets will navigate the last mile in the inflation and Fed tightening cycles, bringing more open road but also some bumps along the way. Equities and bonds fell into a bear market in 2022, as the Federal Reserve began hiking interest rates to fight four-decade-high inflation. 

2023 brought periods of sharply rising and falling interest rates, with stocks staging a solid rebound. 

 We think 2024 will bring the next phase of the cycle. 

Inflation should continue to moderate amid a slowing economy. And we expect the Fed to slowly transition away from a restrictive interest rate policy, helping clear the road for a renewed expansion. 

 The market won’t dodge every pothole as this takes shape. But we think 2024 will ultimately prove to be a positive year for both stock and bond returns.

 The U.S. economy remained remarkably resilient for much of 2023, with GDP growth above 2% annualized for the first three quarters of the year. This was driven in large part by healthy consumption growth: Households continued to spend despite rapidly rising interest rates and tightening lending conditions. 

We expect U.S. economic growth to soften in the first half of 2024, with growth rates likely falling to below 1.5% annualized. We believe somewhat weaker consumption, lower government spending and a cooling labor market will translate to slower growth. 

The consumer faces some challenges heading into 2024, including declining excess savings, rising credit card debt and still-elevated interest rates. In addition, we believe some loosening in the labor market may put downward pressure on wage gains and consumer confidence overall. 

 While the economy may avoid a textbook recession, a rolling recession may emerge. 

Parts of the economy, such as manufacturing and perhaps housing, could bottom and then stabilize, while other parts, such as services and consumption, could peak and move lower. After a year and a half of Fed tightening, we believe economic growth may finally feel the lag impacts in 2024. 

But on the positive side, a slowdown in growth would also potentially support lower inflation and less need for further Fed tightening. As we look toward the back half of 2024, we would expect the economy to gradually accelerate once again. 

 We believe ongoing inflation moderation, a Fed on the sidelines (and possibly signaling rate cuts) and better corporate margins and earnings growth will lead to improving economic growth later in 2024. 

And markets are forward-looking and can start to move higher even before economic growth stabilizes and improves. 

 WHO IS EDWARD JONES. Edward D. Jones & Co., L.P., simplified as Edward Jones, is a financial services firm headquartered in St. Louis, Missouri, United States. It serves investment clients in the U.S. and Canada, through its branch network of more than 15,000 locations and 19,000 financial advisors. Wikipedia Parent organization: JONES FINANCIAL COMPANIES LP LLP Headquarters: St. Louis, MO Founder: Edward D. Jones Customer service: 1 (800) 441-2357 Founded: 1922, St. Louis, MO AUM: US$1.8 trillion (Q2 2023) Number of employees: 52,000 (2022) 

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