The stock market is facing some uncertainty as we begin 2024. Major U.S. indexes including the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite snapped a nine-week winning streak last week.
Investors are trying to determine if the Federal Reserve will continue aggressive interest rate hikes this year or start cutting rates to boost the economy. The market rallied in December on hopes the Fed would pivot, but stronger than expected December jobs data tampered those expectations.
This week brings key inflation reports – the consumer price index on Thursday and producer price index Friday – that could shape the Fed’s decisions going forward. Earnings season also kicks off in earnest on Friday when big banks like JPMorgan Chase, Citigroup, Bank of America and Wells Fargo report results along with Delta Air Lines.
Here are 5 things investors should know as the stock market opens this Monday morning:
- Markets Stumble After December Rally
The Dow dropped 1.5%, the S&P 500 fell 0.6% and the tech-heavy Nasdaq lost 3.25% last week. This broke the winning streak from November and December when hopes of Fed easing powered gains.
The December jobs report showed employers added over 200,000 jobs despite rate hikes intended to cool the economy. This tempered expectations that the Fed would start cutting rates in early 2023. Markets are searching for direction in the new year.
- More Boeing Plane Issues Lead to Groundings
Boeing stock dropped Monday after the FAA grounded about 171 of its 737 Max 9 jets. The planes were grounded for inspections after a panel blew out during a flight on an Alaska Airlines 737 Max 9 on Friday.
While no serious injuries were reported, this incident adds scrutiny to Boeing’s 737 Max program. The aircraft was previously grounded after two fatal crashes. Boeing has been working to turn around the 737 Max, so this latest issue is a setback.
Congress has moved closer to averting a partial government shutdown. House and Senate leaders announced a $1.59 trillion budget deal Sunday for fiscal 2024. This includes $886 billion for military spending and $704 billion for non-defense.
Lawmakers face deadlines of January 19 and February 2 when funding expires for agencies. While the bipartisan deal is progress, Congress still needs to finalize spending details. The GOP-led House and Democratic-held Senate have clashed on priorities.
- Largest U.S. Radio Company Audacy Plans Bankruptcy
Audacy, the biggest U.S. radio company, said it will file for Chapter 11 bankruptcy protection. This move aims to reduce Audacy’s heavy debt load by around 80%.
The company has suffered as radio advertising spending declines. However, the resilience of radio has been surprising as Audacy’s move shows the medium still faces major challenges.
- Reviewing the U.S. Economy in 2023
As we begin 2024, concerns about a potential economic slowdown and stubborn inflation defined last year. However, steady job growth and avoiding a recession provided positives for the U.S. economy as the Fed hiked rates to curb prices.
Key events that shaped 2023 included a surge in stocks, the box office dominance of “Barbie,” and spiking mortgage rates. While challenges remain, the U.S. economy showed remarkable resilience last year.
In summary, the stock market begins 2024 seeking direction after a volatile end to 2023. Key inflation data this week could determine if the Fed continues aggressive rate hikes or pauses to boost the economy. Meanwhile, more Boeing woes, a potential government shutdown, and radio giant Audacy’s bankruptcy plan highlight other business challenges emerging this year.
