2023 finished the year with a pleasant contrast to the negative performance of the US stock and bond market of 2022. The Federal Reserve had another busy year, increasing interest rates 4 additional times, which followed the 7 increases in 2022. These increases brought short term interest rates up to over 5% for the first time since 2007. The Fed is still attempting to control lingering inflation in our economy, and announced in November that they may begin lowering rates in 2024. This news caused both the stock and bond markets to rally at the end of 2023. Hopes for the economy to pull off a” soft landing” in the upcoming months and year ahead, versus slowing into a recession, was the message investors wanted to hear. The S&P 500 posted a nice gain for 2023, however we must mention that a small group of stocks nicknamed the Magnificent 7 (Apple, Microsoft, Alphabet, Amazon, Meta, Tesla, and NVIDIA) accounted for a large percentage of that gain.
Looking ahead in 2024, there is a backdrop of potential lower interest rates by year end, the upcoming November 2024 election, and rising geopolitical tensions. We would not be surprised for the investment markets to take a slight pause from the rally, and perhaps display some volatility at any time during this year. On the positive side, our economy continues to remain strong by most measures and the consumer consumption of goods and services remains at a high level. If the economy remains strong and supported by the Federal Reserve policies, we are hopefully that the events mentioned will have very little impact over the coming year. Based on the strong finish last year, we would encourage clients to review their risk levels, perhaps rebalance their portfolios, and prepare for their 2024 cash flow needs early to take advantage of higher portfolio values.
Taxes are often top of mind this time of year. Many clients have already began receiving their tax documents from our firm and those who haven’t should receive these documents by mid-Feb. Please remember it can take several weeks to receive revisions and if you have any questions regarding these documents, please don’t hesitate to call us for clarification. We encourage you to be patient and work with your tax advisor to determine the right time to submit your final tax return. It is also common for items such as IRA contribution limits, catch up contribution limits, gift tax annual exclusion amounts, and many other rules to change. We’ve attached our 2024 Tax Planning Guide as a reference that we hope you find useful.
In closing, we would like to say “Thank you” for the continued trust and confidence you’ve placed with our team. Our practice has grown and rebranded over the last year into 8044 Wealth Management Group of Wells Fargo Advisors. As a combined team we bring over 125 years of experience together and we look forward to continuing to serve your needs. Wishing you all a safe and prosperous 2024!
2024 Tax Planning GuideRespectfully,
8044 Wealth Management Group of Wells Fargo Advisors
Erik E. Shifflett, CFP®, First Vice President - Investment Officer
Timothy G. Miller, CFP®, First Vice President-Investments
Aaron Till, First Vice President- Investment Officer
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https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overviewThe opinions expressed in this communication are those of the author(s) and are not necessarily those of Wells Fargo Advisors or its affiliates.
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