Stock market news today: Stocks mixed with CPI data, Fed on the horizon

Stocks face an ‘unequal and fragmented’ 2024

Wall Street widely expects the Federal Reserve to hold rates steady when central bankers unveil their policy decision later this week.

But that doesn’t mean that stocks will continue their rally into next year.

Investors are banking that the Fed will achieve a soft landing and start to bring rates down in 2024. While that scenario is still possible, rate cuts might also spell a slowing or contracting economy, which would place equities in a different environment than they are in today, wrote Greg Marcus, managing director at UBS Private Wealth Management, in a note on Monday.

Individual stocks will also fare differently next year, “with a variety of winners and losers across all sectors,” he said, in an “unequal and fragmented” equities market. Even if the Fed climbs down from its tightening campaign, interest rates will still remain higher than during the lucrative zero percent interest rate era.

“Investors will be more focused on rewarding companies who show signs of growth and avoiding profitless and speculative companies,” he said, emphasizing that fundamentals will play a bigger role than during the more heady 2010s. In 2024, investors will be more discerning in separating the wheat from the chaff, he said.

“Markets are already high right now, and although the economy has proven resilient to higher rates this year, that cannot go on indefinitely,” said Marcus. “Rates will come down but they are still projected to be higher for longer, and not all companies will be able to navigate this environment.”

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