Webinar

Spring 2024 Investment Outlook – April 10

Capitalizing on today’s market opportunities to meet your financial goals.

At a glance

The Federal Reserve held interest rates at their highest levels since 2001, though investors expect three rate cuts in 2024. U.S. equities touched another all-time high as economic data generally improved.

chart depicts global health trend at 39.2 trending weak to 62.1.

Source: Global Economic Health Check, U.S. Bank Asset Management Group, March 22, 2024.

U.S. Bank Global Economic Health Check

The U.S. Bank proprietary Global Health Check incorporates more than 1,000 data points — including business climate factors and economic sector categories for 22 major economies representing 80 percent of total global wealth — to reflect our view of the current strength of worldwide economic growth.

Number of the week:

3.3%

Consensus expectations for earnings growth in the first quarter compared to a year earlier. Fourth quarter 2023 earnings grew 8.0% year-over-year.





Term of the week:

Federal Reserve Summary of Economic Projections

A summary of Federal Open Market Committee participants' projections for economic growth, the unemployment rate, inflation and the appropriate policy interest rate. The summary is released four times per year.

Quote of the week:

“We raised our S&P 500 year-end 2024 price target to 5,520 from 4,950, up 5.5% from Friday’s close, based on a multiple of 23 times projected earnings of $240. While elevated, a multiple of 23 remains short of historical extremes, and projected earnings of $240 for 2024 is in line with current consensus projections.”

― Terry Sandven, Portfolio Manager, Chief Equity Strategist, U.S. Bank

Global economy

Quick take: Lower interest rates are supporting the U.S. housing market. Purchasing manager surveys are generally improving across the global economy, led by strength across the U.S. and in services activity outside the U.S.

Our view: The global economy continues to see moderating growth, especially across manufacturing activity. Global inflation continues to decelerate. Despite higher interest rates, the U.S. Bank Economic Team sees conditions consistent with a soft landing in the U.S.

Equity markets

Quick take: U.S. equities continue to trend at or near all-time highs, with overall market breadth improving. However, some recent earnings reports highlight growing pressure on consumers, particularly lower-income groups.

Our view: Inflation is persistent but appears to be waning, interest rates are elevated but with downside bias and earnings projections have stabilized, all serving as a basis for stocks to trend higher.

Bond markets

Quick take: Federal Reserve committee members increased their forecasts for growth and inflation in 2024 but still expect multiple interest rate cuts will be appropriate this year. Treasury yields fell (bond prices rose) as investors became more confident the Fed will cut rates multiple times by year-end.

Our view: Bond yields already incorporate gradual rate cuts, which creates two-sided risk for prices, but high-quality bonds still offer an attractive source of steady income for portfolios. Riskier high yield bonds are expensive by historic standards but continue to benefit from resilient economic growth and strong investor demand.

Real assets

Quick take: Infrastructure stocks were the best performers in real assets last week, with declining interest rates creating broad-based gains, but they still trailed the broader market. Real Estate provided mixed performance and commodities moved mostly lower as the dollar rose. Food-based commodities were the lone bright spot, led by large gains in the cocoa market.

Our view: Diversified publicly traded real estate trusts remain inexpensive relative to private real estate. Tangible assets with stable cash flows present relative opportunities if currently strong investor sentiment erodes. Commodities remain vulnerable if consensus expectations for falling inflation and decelerating growth come to fruition.

Based on our strategic approach to creating diversified portfolios, guidelines are in place concerning the construction of portfolios and how investments should be allocated to specific asset classes based on client goals, objectives and tolerance for risk. Not all recommended asset classes will be suitable for every portfolio. Diversification and asset allocation do not guarantee returns or protect against losses.

Past performance is no guarantee of future results. All performance data, while obtained from sources deemed to be reliable, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for direct investment. The S&P 500 Index consists of 500 widely traded stocks that are considered to represent the performance of the U.S. stock market in general. The NASDAQ Composite Index is a market-capitalization weighted average of roughly 5,000 stocks that are electronically traded in the NASDAQ market. The NAHB/Wells Fargo Housing Market Index is based on a monthly survey of members belonging to the National Association of Home Builders (NAHB). The index is designed to measure sentiment for the U.S. single-family housing market and is a widely watched gauge of the outlook for the U.S. housing sector. The S&P Global Purchasing Managers' Index data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies. The Personal Consumption Expenditures (PCE) Price Index is a measure of the prices that people living in the United States, or those buying on their behalf, pay for goods and services. It is known for capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior.

Insights from our experts

How we approach your long-term investing success

We use a data- and process-driven three step methodology to develop an investment strategy unique to you.

The debt ceiling debate in focus

With the U.S. government’s authority to borrow money bumping up against the federally mandated debt limit this year, is a political confrontation brewing that could impact capital markets?

How we analyze the economy

The economy doesn’t just move in a straight line. Our Health Check assesses its direction and how fast it’s moving.

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Disclosures

Investment products and services are:
Not a deposit • Not FDIC insured • May lose value • Not bank guaranteed • Not insured by any federal government agency

U.S. Wealth Management – U.S. Bank is a marketing logo for U.S. Bank.

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This information represents the opinion of U.S. Bank Wealth Management. The views are subject to change at any time based on market or other conditions and are current as of the date indicated on the materials. This is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable but is not guaranteed as to accuracy or completeness. U.S. Bank is not affiliated or associated with any organizations mentioned.

Based on our strategic approach to creating diversified portfolios, guidelines are in place concerning the construction of portfolios and how investments should be allocated to specific asset classes based on client goals, objectives and tolerance for risk. Not all recommended asset classes will be suitable for every portfolio.

Diversification and asset allocation do not guarantee returns or protect against losses.

Past performance is no guarantee of future results. All performance data, while obtained from sources deemed to be reliable, are not guaranteed for accuracy.

Equity securities are subject to stock market fluctuations that occur in response to economic and business developments.

International investing involves special risks, including foreign taxation, currency risks, risks associated with possible differences in financial standards and other risks associated with future political and economic developments. 

Investing in emerging markets may involve greater risks than investing in more developed countries. In addition, concentration of investments in a single region may result in greater volatility.

Investments in fixed income securities are subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Investment in fixed income securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term securities. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities.

Investments in high yield bonds offer the potential for high current income and attractive total return, but involve certain risks. Changes in economic conditions or other circumstances may adversely affect a bond issuer’s ability to make principal and interest payments.

The municipal bond market is volatile and can be significantly affected by adverse tax, legislative or political changes and the financial condition of the issues of municipal securities. Interest rate increases can cause the price of a bond to decrease. Income on municipal bonds is free from federal taxes, but may be subject to the federal alternative minimum tax (AMT), state and local taxes.

There are special risks associated with investments in real assets such as commodities and real estate securities. For commodities, risks may include market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes and the impact of adverse political or financial factors. Investments in real estate securities can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates and risks related to renting properties (such as rental defaults).

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The information provided represents the opinion of U.S. Bank and is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific investment advice and should not be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation.

U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.