Apr 66 min
Updated: Apr 7
by Ben Weiss, for the Call to Leap Team
Deep breaths, everyone! We made it to the weekend and successfully weathered one of the worse weeks on the market this year. We've been spoiled by a nearly uninterrupted bull run throughout the first quarter of the year, when the market historically likes to take a breather after the holiday "Santa Rally". As we'll explore deeper in a minute, the major indices kicked off Q2 2024 by taking a step back from their recent unchecked all-time highs.
While I still believe the economy is strong and pointed in the right direction, I like to remind myself that market correction is a normal, cyclical part of a healthy market. But don't be surprised if Steve and I take a bit more of conservative stance in the next couple weeks while we proceed carefully to see if this correction is temporary or picks up more bearish steam.
But who cares about the stock market when you've got the college basketball Final Four playing this weekend? With my tournament brackets utterly busted, I'm excited to watch some amazing games and generational athletes work their magic (looking at you, Caitlin Clark). And for those who don't care for basketball, NFL training camp is only 3 months away. 😉
Happy Friday, everyone! Let's take a look at what happened this week and what's coming up...
The market this week
We certainly had some winners and losers this week. Don't let the bright green boxes from AMZN and META fool your eye—the market had a down week, though it showed some solid resilience towards the end. Thursday alone, the major indices all took a sharp dive around -2% each, in what felt like a long-awaited opportunity for investors to take profits and see the market finally correct itself somewhat. On Friday, we saw some modest recovery across the board but not enough to bring us above breakeven for the week.
With the jobs report this week, inflation data next week, and major earnings season starting right after that, there is a general feeling of thick anticipation and maybe some pause as Smart Money decides where to invest next. Fortunately, as long-term disciplined investors, we don't need to worry too much about dips and pops since we're in it for the long haul. However, market trends may influence some of our shorter-term options positions (think: 1-3 months out) as we decide how aggressive or conservative we want to be coming up.
By the numbers, the S&P 500 (-1.02%), Dow Jones (-2.27%), Nasdaq (-1.31%), Russell 2000 (-2.94%) all registered humble losses, though each index rallied to close out the week on Friday following the biggest sell-off on Thursday.
In the news
Jobs as far as the eye can see...While we waiting CPI and PPI (price indices) inflation data next week, this week was all about jobs. Employment data is always one of those funny macroeconomic "double-edged swords" that makes my head hurt a little: we want job growth to be positive and unemployment to be low to indicate the economic engine is humming and producing with strength, but too many new jobs too quickly can suggest the economy may be growing faster than we need while trying to cool inflation and may delay the Federal Reserve in rolling back interest rates—lowering interest rates could trigger investors to reposition money back into the stock market and out of safer money market funds and Treasuries.
Enter the "nonfarm payroll" jobs report this morning. (Note: "nonfarm" include workers in the private sector and government agencies, but excludes farming, private households, non-profit, and active military.) Experts were anticipating 200,000 new non-farm-based jobs, in-line with the recent trend, however the March report surprised many with an added 303,000 US jobs last month, highlighting the ongoing resilient labor market currently.
Unemployment also ticked lower to 3.8% as expected—near its historic 54-year low—which is always good to see, along with wages rising 0.3% in March and 4.1% year-over-year. Additionally, the "participation rate" grew, suggesting more working-age adults are deciding to re-enter the labor market. Undoubtedly, the Federal Reserve is digesting these jobs and inflation data to continue their calculation of when to begin interest rate cuts.
Did you know?...I learned today that the US economy only needs about 100,000 new jobs each month to keep up with population growth. Any more than that level can be considered accelerated job growth.
Remember: Modest inflation is actually a good sign for a healthy economy. At a basic level, more jobs, higher wages, and healthy demand for companies' goods and services naturally causes inflation over time. Deflation (the opposite of inflation) can lead to a recession or, worse, a depression—not good! So keep in mind when we hear lots of talk about how "bad" inflation is, very high inflation (also called hyperinflation) is not good—like what we saw in 2020—but inflation by itself is not necessarily bad. As Fed Chairman Jerome Powell reiterated, "We are at a place where the economy is strong."
Check out other points in past decades where major events caused periods of higher inflation.
Across the pond...Inflation data in the 20-country Eurozone showed a decrease to 2.4% last month, comfortably below expectations of 2.6%. While unemployment across the Eurozone remains higher than the US at 6.5%, it did drop modestly from 6.6% last month. These data combined to boost many investors' hopes for European interest rate cuts, potentially as soon as this June.
SPY
Well, it finally happened—SPY and QQQ both slipped below the green upward trading channels I've drawn on the daily charts. While I'm not rushing to declare some broader trend reversal, this lower deviation below the well-defined trend dating back to October last year has me and Steve watching closely.
On the QQQ chart, the price is still within the shallower, longer-term orange upward channel but has clearly broken below the green. We're still sitting a mere 2% below the all-time Nasdaq high so there is certainly no need to panic, just to be observant and thoughtful heading into major earnings coming up soon.
Do you agree with how I drew my lines or do you see it differently? Let's chat on Discord!
QQQ
You got this, everyone! Stay disciplined, pay yourself first, and always invest in your greatest asset—yourself. As always, let us know if you have any questions. 🙌🏻
-Ben and Steve
Friendly reminders from Steve and Ben:
Check out Steve's favorite checking and savings accounts
Click here and here to see different accounts that could fit your banking needs. Offers including great sign-up bonuses and higher interest rates to let your money work harder for you.
💪💰 Do you have the power?...Based off the great recommendation from Steve and lots of folks in the CTL community, Ben recently signed up for budgeting app Empower to get a better dashboard picture of all his various accounts and has been really been enjoying how easy it is to use. If you'd like to give Empower a try, click here to check it out!
Let your money work harder for you...
I'm also getting about 5% APY by having my cash sit in my Fidelity account as I sell my cash-secured puts. Here's the link if you're interested in getting started!
Manage Your Cash Against Rising Costs | Compare Our Rate | Fidelity
📌Join Our Discord 💬
Investing, trading, and building wealth was a lonely journey for me. This is why my team and I created a Discord group for you and the other members to shares ideas and support one another. You don't have to go through it alone as we're all here to help. 😉
You can sign up here.
If you need help, feel free to send us a message.
Coming from a teacher's perspective, I believe it's important to engage in conversations with people who are also seeking to reach financial freedom.
Remember that we are a community of wealth builders at all different levels, so be positive, kind, and helpful to others, so we can help each other get to financial freedom much faster.
⚠️⚠️⚠️⚠️⚠️⚠️
Please make sure to NEVER give your personal information to anyone on Discord, especially anyone who may look like Steve or Ben. There are many impersonators on Discord who will ask you to click a link or give them money to invest, which we will NEVER do.
If someone messages you claiming to be Steve or Ben, always check that their username matches EXACTLY "SteveCTL" or "BenW." and they have the "Head Mod" tag in their profile.
If you're ever unsure, please stop and ask! We're always here to help. Stay safe everyone!
⚠️⚠️⚠️⚠️⚠️⚠️
Disclaimer:
The following article is strictly the opinion of the author and is to not be considered financial/investment advice. Call to Leap LLC and the author of this article do not claim to be a registered financial advisor (RIA) or financial advisor. Please visit our terms of service and privacy policy before reading this article.
"Call to Leap may earn affiliate commissions from the links mentioned. Call to Leap is part of an affiliate network and receives compensation for sending traffic to partner sites such as ImpactRadius, CardRatings, MyBankTracker, and more."