May 13, 2024 •Nathan Willis
Key Events: Inflation dampens consumers’ outlook
The University of Michigan Consumer Sentiment Survey showed an surprisingly large drop in sentiment, driven by heightened inflation concerns.
S&P 500 earnings grew at 5.4% during the first quarter,[1] driven by the top companies; S&P 500 earnings would have actually declined 2.4% without the top 5 stocks.
Market Review: Earnings overcome inflation worries
Positive earnings results supported stock returns for the week, despite inflation-induced volatility. Equities are trading on hopes for continued positive earnings for 2024.
International stocks and high yield bonds gained as the market rewarded riskier assets.
Outlook: Staying anchored to what matters
Despite the outsized influence of the top 5 companies in Q1, analysts remain optimistic, expecting S&P 500 earnings to grow 11.1% in 2024 with double digit growth from the rest of the index - the “other” 495 stocks. This broadening of earnings growth is crucial for success in 2024.
Volatility in the short-term data–good earnings but bad inflation–reminds us we need an anchor. Despite the short-term noise, the most important thing about investing is staying invested. Long-term discipline is the key to wealth accumulation.
The Berkshire Hathaway annual meeting was held last weekend; 99% of Warren Buffet’s net worth has been accumulated after he made his first billion dollars at age 56. Time in the market matters to the most successful investors – those with discipline.
Our long-term discipline helps investors remain invested through whatever may come in the short term: soft landing, inflation, or recession.
“The biggest thing about making money is time. You don’t have to be particularly smart, you just have to be patient." [2]
Navigator Outlook: May 2024
This material is intended to be educational in nature,[3] and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. OneAscent can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.
[1] Source: FactSet Research Systems sp-500-earnings-growth outside of top 5 contributors NVIDIA(Still to report), Alphabet, Amazon.com, Meta Platforms, and Microsoft growth would have declined 2.4%
[2] Source: Finmasters.com https://finmasters.com/warren-buffett-net-worth/ Source: Warren Buffett- you Just Have To Be Patient (yahoo.com)
[3] Source: Market Returns reference the following indices: Large Cap – S&P 500, Mid Cap Growth – Russell Midcap growth, Mid Cap Value – Russell Midcap Value, Small Cap – Russell 2000, Developed – MSCI EAFE, Emerging – MSCI Emerging Markets, Aggregate – Bloomberg US Aggregate, High Yield – Bloomberg High Yield
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