Unexpectedly Intriguing!
12 February 2024

The S&P 500 (Index: SPX) rose a little under 1.4% over its previous week's close, breaking through the 5,000 level on Friday, 9 February 2024 and wrapping up the week at a new high of 5,026.61.

Much of that boost came on the strength of a rally in megacaps, which is to say the stocks of the companies with the largest market capitalizations in the U.S. stock market.

The move also coincides with a transition in how far into the future investors are focusing their attention. Investors have shifted their forward time horizon from 2024-Q1 to 2024-Q2. That matches the strengthening expectation the Federal Reserve will hold off on starting a series of rate cuts during the second quarter of 2024. As for why that expectation strengthened, it had a lot to do with Federal Reserve officials sending the message they are going to hold off cutting rates until later in 2024.

Here's the latest update for the alternative futures chart, where we find the trajectory of the S&P 500 is consistent with investors focusing on 2024-Q2 in setting the level of the index.

Alternative Futures - S&P 500 - 2024Q1 - Standard Model (m=+1.5 from 9 March 2023) - Snapshot on 9 Feb 2024

The week came with a big political story in the United States, which broke on Thursday, 8 February 2024. The story is the U.S. Department of Justice's announcement it would not file criminal charges against President Joe Biden for the willful mishandling of classified documents going back to his time as Vice-President during the Obama administration. The special prosecutor investigating the matter declined to file charges in part because of the President's age and failing memory would make it difficult to obtain a conviction in a jury trial.

That announcement was followed with President Biden's evening press conference, which has been described as "an all-time PR blunder" because it raised further questions of his mental acuity and fitness to continue in office.

We're discussing the story to make a point that matters to investors. This is a political story that has a direct bearing on the future of the U.S. government. With the 2024 presidential election campaign well underway and setting up to be a rematch between Joe Biden and Donald Trump, it's a story that can very much affect what investors expect for the future. If Biden steps aside, whether in running for reelection or in even finishing his current term as President, the outcome of that action will create new uncertainties for investors. Increased uncertainty has a negative effect on stock prices.

All this news broke well ahead of when markets opened on Friday, 9 February 2024, so investors had ample time to absorb its impact. The S&P 500 would rise 0.6% to break through the index' 5,000 milestone and close at an all-time record high that day. For something many might think would have a negative effect, that effect would appear to be minimal.

That's not because investors had somehow mysteriously already priced that new information into the market beforehand. Nor is it because investors are ecstatic at the prospect of a future without Biden as President. Nor is it because investors are rejecting what the DOJ's report and the press conference revealed about President Biden. Historically speaking, unless changes in tax rates are involved, what politics contributes to stock prices is virtually indistiguishable from noise. Noise that gets easily lost among the more serious factors that drive stock prices.

Which is why we almost never feature political headlines when recapping the market-moving news headlines of the week that was, although we're making an exception this week and are presenting three political headlines just to drive that point home. Here are the week's headlines:

Monday, 5 February 2024
Tuesday, 6 February 2024
Wednesday, 7 February 2024
Thursday, 8 February 2024
Friday, 9 February 2024

The CME Group's FedWatch Tool continues to project the Fed will hold the Federal Funds Rate steady in a target range of 5.25-5.50% until 1 May 2024 (2024-Q2). This date marks the anticipated beginning of a series of quarter point rate cuts that are expected to take place at six-to-twelve-week intervals through the end of 2024.

The Atlanta Fed's GDPNow tool's latest estimate of real GDP growth for the first quarter of 2024 (2024-Q1) dropped to +3.4% from last week's estimate of +4.2%.

Image credit: Microsoft Bing Image Creator. Prompt: "A Wall Street bull celebrating the S&P 500 rising above 5,000, with the number 5,000 and the letters S&P prominently displayed."

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Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

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