Economy
The 10 year treasury rate continued to decline this week, dipping below 4%. This represents a little more than a quarter percent decline in rates in the last few weeks. Rates have moved lower recently reflecting an increased demand for safe-haven investment assets and concerns about slowing economic growth. The move in the 10-year has also had an impact on mortgage rates, which fell below 6% this week for the first time since 2022. There is some hope that lower rates will translate into increased home buying activity. Two weeks ago the National Association of Realtors reported a sharp decline in existing home sales. As mortgage rates have declined, the home affordability picture has improved, but the supply of homes on the market remains low, which has kept prices stable.
Markets
The S&P 500 saw a modest decline of 0.4% this week as we continue to see a rotation out of technology stocks and into other areas of the market like energy, materials, and consumer staples. On one hand, it's great to see a broadening out of stocks that are rising as the bull market has entered it's fourth year. On the other hand, tech stocks are arguably the reason for the strength of the bull market, and one has to wonder if the overall market can hold up (and for how long) with those stocks struggling to find traction. The S&P 500 is only about 1% from it's all-time high while tech stocks, which haven't sniffed all-time highs in over 4 months, find themselves down roughly 10%, firmly in correction territory. Interestingly, the Magnificent Seven companies reporting Q4 earnings growth of more than 27% while their stock prices have fallen.
What We're Reading
- Why Your Average Tax Rate Doesn't Tell the Real Story in Retirement- Retirement Researcher
- US Private Sector Balance Sheets in Excellent Shape- Apollo
Have a great weekend.
Dogwood Wealth Management