Five interesting things that Hodges Capital research analysts discovered this week...

#1 ELECTION MYTH: A common investing myth is that stocks do not perform well in election years. A recent study by J.P. Morgan showed that returns in election and non-election years are not that different. Based on data going back to 1928, the S&P 500 return averaged 7.5% during elections compared with 8.0% during non-election years.

#2 HISTORICALLY RARE RATE CUTS: Strategas Research recently published a note pointing out how rare it would be for the Fed to cut rates with unemployment below 4%. Historically, there have been only six instances where the Fed cut rates with an unemployment rate this low.

#3 WALLBOARD: Recent industry data indicated that gypsum wallboard volume in the final quarter of 2023 was down 0.8%, far better than some pundits expected. More importantly, pricing has remained resilient due to structural shortages of synthetic gypsum used to make wallboard. Overall, we view this data as a positive indicator for wallboard manufacturers.  

#4 ENERGY SPENDING TRENDS: According to a report published this week by Benchmark, E&P capital spending is expected to be up 5% in 2024—however, domestic activity is expected to be down this year.

#5 EARNINGS SEASON: The fourth quarter earnings season shifted into high gear this week. Although it is still early in the reporting season, 72% of the 97 companies that reported earnings as of mid-week have exceeded earnings expectations, according to data from Bespoke.  

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This discussion is not intended to be a forecast of future events and should not be considered a recommendation to buy or sell any security. Past performance is not indicative of future results. Investing involves risk. Principal loss is possible. Investing in smaller companies involves additional risks such as limited liquidity and greater volatility. No current or prospective client should assume that information referenced in this communication is a recommendation to buy or sell any security or is a substitute for personalized investment advice from your individual advisor. HCM does not provide tax or legal advice. Consult your tax or legal advisor for any related questions.

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