Week of 01/01-01/05 First Week of 2024, Markets Close Slightly Lower

The new trading year began on Tuesday with indexes sliding from their previous levels and regaining some territory on Thursday's session. Friday's session was a bit different as investors digested a strong labor market report for December, which induced worries on the FED delaying interest rate cuts until further in 2024. A strong labor market and higher wages mean that consumers and businesses feel confident about spending, which can fuel inflation. Markets are heavily anticipating rate cuts from the Federal Reserve this year, based on a slowing economy, lower inflation and a less robust job market. All three market indexes trended lower for the week, snapping the nine-week streak of gains to begin 2024. The market had a rough start to the short trading week, after a downgrade on Apple's stock from two major research analyst groups sent it lower, dragging down the broader market. Traders also likely took profits on some stocks that ran up during the 2023 year-end rally, contributing to the selloff. Investors are now looking towards the beginning of earnings season next week in which most companies have expected growth over Q4 of 2023.

One of the major areas of focus for 2024 are the expected interest rate cuts from the Federal Reserve. If the economy shifts to a slower pace, we could see an effect called "labor hoarding". Labor hoarding refers to the practice of retaining excess employees during an economic downturn or period of decreased demand for goods and services. It is often seen as a proactive move by companies to avoid potential workforce shortages or the costs associated with recruitment and retraining when the economy rebounds. The decision to hoard labor can have implications for both the company's financial performance and the stock market. From a company's perspective, labor hoarding can result in higher operating costs and lower profit margins in the short term. This can have a negative impact on investor sentiment and potentially lead to a decline in the company's stock price. However, labor hoarding can also serve as a strategic move to maintain productivity and competitiveness in the long term, especially if it allows companies to retain skilled and experienced employees who can contribute to future growth. Many employers didn't follow this practice during the pandemic and had to contend with labor shortages when the economic recovery phase began. Ultimately, the stock market's reaction to labor hoarding depends on various factors, including the company's financial position, market conditions, and the effectiveness of its labor management strategy.