Week In Review

The Federal Reserve policy meeting and interest rate decision had headline billing and definitely stole

the show, as the benchmark interest rate was reduced by 50 basis points to a target range of 4.75% - 5.00%, the first interest rate cut since the start of the global pandemic in 2020. The interest rate reduction was perhaps more aggressive than many market observers had expected considering it was only two months ago that Fed Chairman Jerome Powell had expressed concern that any policy miscalculation could destroy hard-won progress on inflation. That tune changed to reflect the Fed’s dual mandate, as Powell stated, “we’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation. That’s what we’re trying to do, and I think you could take today’s action as a sign of our strong commitment to achieve that goal.” Initially, market applause was mercurial as the the larger move created some anxiety about labor market weakness and future economic growth. However, a much stronger U.S. retail sales number and the release of the FOMC’s Summary of Economic Projections that showed the benchmark rate 2% lower by the end of 2026 restored the market’s confidence in the potential for a soft landing. The S&P 500 closed at a new high, up +1.4%.

This Week

The Bureau of Economic Analysis keeps the show on the road with the latest Personal Consumption Expenditures Price Index update. In view of the rate cut, any hint of inflationary pressure could ignite market volatility.

Portfolio Themes

Shifts in the business cycle and an evolving Fed monetary policy can foster a high-return dispersion environment. When fewer stocks are moving in the same direction, there may be an increased opportunity for actively managed portfolios to outperform. Simplicity provides access to model portfolios that strategically allocate assets in the pursuit of alpha.

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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from J.P. Morgan Asset Management. 1 Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums.

2 Index Statistics: P/E TTM – Calculated by dividing an investment’s price by the trailing 12-month earnings per share value. Yield – Expected dividend-per-share divided by current share price. Table statistics are updated monthly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX). Past performance does not guarantee future results.

Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.