What a start to the year for global markets already up in the low double digits.  Much like 2023, the S&P 500 continues to carry the day but international markets have performed admirably as well, up in the mid-single digits whereas U.S. small cap companies are slightly positive as well.

We do feel a lot of these returns have been justified given the strength of the underlying economy.  The U.S. labor market continues to be resilient, wages are outpacing the growth of inflation, finally, as the growth rate of inflation continues to move lower, and last but not least household balance sheets continue to be robust. 

Now because of these underlying reasons, we do feel that there are further gains ahead between now and year end for the stock market.  Corporate margins continue to be robust, between now and year end we feel like the federal reserve will signal their eventual rate cut path which the markets are likely to respond positively too, and last but not least AI momentum is likely to continue given the underlying investment in the economy within that space.  Bonds we do feel will be slightly positive between now and year-end with the eventual fall of interest rates bringing bond prices higher with it, given the aforementioned reasons around the Federal Reserve and the chance inflation continues to move lower.

Now if we do have concerns, they are within earnings expectations maybe being slightly optimistic for year-end.  If the market does eventually sniff that out that will probably be around the fall time period causing some volatility.  And last but not least, to state the obvious, it is an election year.  Election years tend to exhibit volatility within the fall time period which would correspond with some of our potential earnings concerns.

So that being said, we do feel there will be gains between now and year end, albeit not at the same pace we saw in the first half of the year.  But the gains are likely to occur within the summer months and towards year end once the election results are known, with some volatility in-between. 

Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Katterhenry Investment Group of NEST Capital is a separate entity from WFAFN.