The path of interest rates has been highly uncertain over the past few years due to inflation, economic growth, and the Fed. The 10-year U.S. Treasury yield, for instance, jumped from 3.8% at the end of last year to a high of 4.7% in April, before settling around 4.2% more recently.

Higher rates have defied the expectations of investors and economists, creating a challenging environment for the bond market, since rising rates push down bond prices. However, with inflation beginning to improve, many finally expect the Fed to begin cutting rates by the end of the year. What perspective do diversified investors need to stay balanced in the months ahead?

As with many things in life, knowing what we’re supposed to do and actually doing it are two separate things. This is true for our health, relationships, careers, and of course, our finances. When it comes to investing, it’s well known that properly diversifying and staying invested are the best ways to achieve long-term financial goals.

However, this is often easier said than done, especially when market and economic outlooks are uncertain, as they have been for many years. Fortunately, there are investment methods for managing the emotions that come from market volatility. What should investors know about how they can stick to an investment plan through years and decades?

Investors and the financial media tend to focus on macroeconomic concerns such as inflation, labor markets, and the Fed. While these topics are important, history shows that the economy and markets grow over long periods of time due to technological innovation and gains in productivity. It’s for this reason that recent developments in artificial intelligence have captured the attention of investors and economists.

The Dow Jones Industrial Average reached 40,000 for the first time recently as markets continue to rebound from a 5% decline earlier this year. While this has felt like a difficult year for many investors due to inflation, high interest rates, and growth concerns, the reality is that the broad market has achieved 23 new all-time highs. Other asset classes, including international stocks, commodities, and even gold, have surged alongside the U.S. stock market as interest rate expectations have fallen.

With markets nervous about stubborn inflation, a gradually slowing labor market, and the timing of the first Fed rate cut, investors are more focused on this corporate earnings season than usual. This is because while the economy has avoided a “hard landing” corporate earnings only began to rebound in the second half of 2023.

Since the stock market tends to follow the trajectory of earnings in the long run, many investors are hoping for signs that corporate profits will grow sustainably in the coming quarters. What do investors need to know today about how earnings might impact the stock market and economy?