Stocks Climb to Record Highs on Cooling Inflation 

June 14, 2024

Here are the economic and market highlights for the week: 

  • The Federal Reserve held rates steady at a benchmark range of 5.25% to 5.50% following this week’s FOMC meeting. The central bank lifted its projections for its effective “terminal rate”, the rate at which its benchmark fed funds rate will ultimately peak, to 5.10%.  This actuality, if true, is consistent with the target they had hoped to achieve when setting a target range of 5% to 5.25% for its open market operations. Should 5.1% ultimately be the effective rate, it also suggests the Fed sees just one quarter point rate cut this year – down from the three rate cuts previously forecasted in March. Investors, however, were quick to dismiss the revision on the prospect for four rate cuts – or a full percentage point reduction next year. 


  • Consumer prices rose 3.30% year over year in May, down from April’s 3.40% increase. A drop in energy prices and slower growth in food helped keep price increases in check. Core CPI, which excludes volatile food and energy, rose 0.20% in May and was up 3.40% from the year ago period. Shelter remained a trouble spot, up 0.40% month-to-month and up 5.40% yoy.


  • Wholesale prices, prices that producers get for their goods and services, fell -0.20% in May. A -0.80% decline in final demand goods prices, the largest decline since October 2023, drove the headline figure lower. Declines in energy and food prices also pushed prices lower. Excluding food, energy and trade services, producer prices were unchanged for the month. Year-over-year, prices at the producer level were higher by 2.20%.


Stocks Climb to Record Highs on Cooling Inflation

Cooling inflation helped fuel another record-setting run for investors. The S&P 500 notched four straight record closing highs as both the CPI and PPI indices showed inflation easing in May. That helped push the index above 5,400 for the first time ever. The Federal Reserve added more fuel to the fire Wednesday afternoon. While it signaled just one rate cut for 2024, it placed four cuts on the table for 2025. The news pushed bond prices higher with the U.S. 10-year treasury yield falling to 4.21%, down sharply from this year’s peak of 4.70%. The week’s dose of bullish optimism helped fuel the S&P 500’s year to date gain to 13.73%.

With the Fed signaling it will cut aggressively in 2025, bullish sentiment is running high. What 2024 has shown however, is that while the Fed may intend to do one thing at the beginning of a year, realities ultimately dictate policy. U.S. economic data has remained far more resilient to higher rates than anticipated and inflation, while moving closer to the Fed’s 2.00% target level, is declining at glacial speeds. Shelter has remained a particularly sticky point with both apartment and home prices remaining elevated. These are the consumers’ largest expenditure category in the CPI index. Until the gauge for those components shows prices beginning to ease, the central bank is likely going to maintain its higher for longer positioning despite what it might have signaled on Wednesday. Fed Chair Jerome Powell continued to hedge the central bank’s bets, saying it was “too soon to tell if Fed policy is sufficiently restrictive.” Only time will, but the message received by markets was that significant rate cuts lie just around the corner. 

The Week Ahead

Next week, we will take a look at the following data: 

  • Retail Sales
  • S&P Flash PMIs
  • Home Sales


Seven Figure Signature: A Cautionary Estate Planning Tale

An article in the Wall Street Journal this week provided a cautionary reminder of the importance of maintaining updated beneficiary designations for retirement accounts, life insurance policies, bank accounts, and other assets. The article shared the story of an individual named Jeffrey Rolison who listed his then-girlfriend, Peggy Losinger, as the sole beneficiary of a workplace retirement account he opened in 1987.  The couple lived together briefly in their 20s and broke up in 1989. Peggy moved out, got married, and started a family.    

When a person designates a beneficiary, they are naming who will receive an asset in the event of the account owner’s passing. In general, a designated beneficiary will take precedence over provisions outlined in a person’s will. This is because the entity that manages the account, such as a bank or insurance company, will transfer the asset to the beneficiary who was named for that specific account. Rolison never updated the beneficiary on his 401(k). It was hand-written on a paper form. When his employer switched from paper records to digital, the information on the form did not show up on the online account, so it’s likely Rolison didn’t remember that Losinger was listed as his beneficiary and would not have seen the designation anywhere. Rolison continued to work and grow his retirement assets until he passed away in 2015 at age 57. Under federal law, employers are generally required to pay out retirement accounts to the last recorded beneficiary or a surviving spouse. Many plans require a spouse to be the death beneficiary of retirement assets unless the spouse gives written consent to an alternative beneficiary.  Rolison never married. As such, Rolison’s girlfriend from nearly four decades prior stands to inherit his $1 million retirement account. Rolison’s family members hired an attorney and have been fighting in court to have the funds awarded to Jeffrey Rolison’s estate, but the funds have still not been paid to either party while the case makes its way through the court system.

Rolison’s story serves as an important reminder to carefully choose beneficiaries and keep them up to date to ensure one’s wishes are carried out. Beneficiary designations should be made for each individual asset through the company or financial institution that holds the asset. It’s important to note that children under the age of 18 cannot receive assets as a beneficiary, but there are mechanisms to help facilitate wealth transfer to children. For example, minors can be named as beneficiaries of a trust with an adult named as the trustee. A trustee is the person who manages the assets in the trust and then distributes them on behalf of the beneficiary as directed in the terms of the trust. Individuals should name contingent beneficiaries who would inherit assets in the event the primary beneficiary is predeceased. 

Per stirpes, which means “by branch” in Latin, is a legal term used to designate who will inherit assets if a beneficiary dies first. With a per stirpes distribution, a beneficiary’s share of an estate will pass to the beneficiary’s descendants, descending down a branch of a family tree. That means that children of the beneficiary—not spouses or siblings—are included in a per stirpes distribution.

A well-crafted estate plan seeks to avoid unfortunate circumstances such as what the Rolison family faces. Estate planning and annual reviews of the decisions and legal documents that outline when and how an individual’s wealth would transfer to heirs can protect loved ones and provide many other benefits. If you have any questions about your estate plan, beneficiary designations, or trusts, please feel free to contact our office to speak with one of our estate planning experts.


















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