Hi there, I’m Bob Graham, President of Riggs Asset Management Company. Today I want to talk about some potential changes in the markets. The key word is potential, but there are a few things we’ve seen over the last several days to a couple of weeks that appear to be improving.

To begin, let’s start with the Federal Reserve and the meeting they held on Wednesday.

The Federal Reserve meets roughly every six weeks. At this most recent meeting, they left short-term interest rates unchanged, but they did make an important change to something that has been happening more behind the scenes.

Since 2022, the Federal Reserve has been operating under a program commonly known as quantitative tightening. This program involves selling Treasury bonds and allowing mortgage-backed securities to run off their balance sheet.

During Wednesday’s meeting, the Fed announced that they are reducing the pace of Treasury bond sales from $25 billion per month to $5 billion per month.

In other words, they are significantly slowing the reduction of their balance sheet. In fact, we believe that by May or sometime this summer, the Federal Reserve may announce that they will stop selling Treasury bonds altogether.

When you look at what’s happening behind the scenes, ending or greatly reducing quantitative tightening could be beneficial for the markets. It may also set the stage for future interest rate cuts, which could further support the stock market.

Now let’s talk about what we’re seeing in the stock market.

Recently, we experienced about a 5–10% market correction, depending on which index you examine. At this point, it appears that we may have established a near-term bottom, or possibly even the bottom for the year. Of course, time will ultimately tell.

However, over the past week to week and a half, we’ve started to see several encouraging signals.

First, market breadth has improved. The number of stocks moving higher has increased significantly, and more companies are now trading above their 50-day and 200-day moving averages.

We’ve also seen movement in the volatility index, or VIX. The VIX recently spiked to around 29, but it has since pulled back to about 19.6, which is close to its long-term average. If the VIX moves below 19 or into the 18 range, that would be a very positive sign for the market.

We’re also seeing buy signals and improving relative strength across several sectors, including:

• Financials

• Certain areas of technology

• Healthcare

Another development I find particularly interesting involves the equal-weighted S&P 500 index.

This index gives each of the 500 companies equal influence, rather than weighting them by market capitalization. By comparison, the traditional S&P 500 index is heavily influenced by the “Magnificent Seven” large technology companies.

Right now, what we’re seeing is that the average stock is actually performing better than the cap-weighted S&P 500 index. That’s typically a healthy sign for the market because it suggests that performance is broadening beyond just a few large companies.

So as we move into spring, we’re starting to see what I would call some green shoots that suggest the stock market may be improving.

Of course, we will continue to monitor the situation closely. If conditions change, we will adjust our outlook accordingly. But for now, the signals appear to be moving in a more positive direction.

If you have any questions about this video—or about anything else—please reach out to your Riggs Asset Management team member. We’re here to help answer your questions and support you in any way we can.

I hope you have a wonderful spring, and we look forward to talking with you again soon.

Thank you.