Labor market strong as inflation sinks

Here are three of the week's top pieces of financial insight, gathered from around the web.

Rebalancing your stock portfolio

Though "frequent trading has many pitfalls," you should consider rebalancing your portfolio annually, said Jon Sindreu in The Wall Street Journal. "Compulsively checking your 401(k)" is still inadvisable. But "the old 'set it and forget it' wisdom" may not be keeping up with the market. A portfolio of S&P 500 stocks that rebalanced yearly between 2020 and today "toward the best-performing sector" would have yielded a compound annual return of 55%. Of course, nobody can predict the market with that kind of perfect foresight. But even a backward-looking "momentum strategy" of switching into whatever sector previously did best "has also blown outright index investing out of the water recently" and has proved successful in the past couple of decades.

Better deals ahead for auto buyers

New cars should finally get cheaper this year, said Pete Grieve in Money. After a yearslong supply crunch that caused car prices to spike dramatically and remain elevated, "Cox Automotive forecasts that the supply of new cars will finally return to normal levels this year." That may finally induce some discounts at dealerships and more rebates from manufacturers. Car buyers need all the help they can get after average monthly car payments "reached a new record high of $739 in the fourth quarter of 2023, and the average down payment hit an all-time high above $7,000," according to Edmunds. The bad news: The average loan rate for a new car stands at 7.4%, "nearly a full percentage point higher than a year ago."

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Labor market strong as inflation sinks

The U.S. economy finished the year with a strong burst of hiring, said Josh Schafer in Yahoo Finance. Employers added 216,000 jobs in December, up from 173,000 the previous month, and the unemployment rate held steady at 3.7% — slightly higher than where it began in 2023 but still relatively low. The report from the Bureau of Labor Statistics last week adds to evidence that the Federal Reserve can lower inflation without triggering a recession, a so-called soft landing that is looking increasingly possible. For the year, the economy added 2.7 million jobs, more than in the years preceding the pandemic. Wages also "increased 0.4% on a monthly basis and 4.1% over last year." The wage gains have outpaced inflation, though pay increases have slowed in recent months.

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