MidWeek Commentary

HI Market View Commentary 03-18-2024

HI Market View Commentary 03-18-2024

Will you please explain dollar cost averaging without having to spend more money?

Let’s say we buy 1000 Shares of a $100 stock costing $100,000

We then buy a married put for $5.50 per share @  $100 Strike = $5,500

So our total cost basis with protection = Stock of $100,000 + Long put $5,500 = $105,500

Maximum loss with $100 long puts was $550 or 5.5% of TIC

We have bad earnings and he stock losses 30% = Shares are now worth $70,000 = $70 per share

Technically speaking, we can sell the stock at $100 and get back our 100K

100,000 or slightly more / $70 = 1,428.57 shares

We will buy 1000 + 400 more shares

105,500 / 1400 = $75.39 per share

Stock is trading at $70 and we are still down $5.39 per share= Cost associated with buying protection

Hardest job of investing = Patience or waiting for things to come back

What if at the next earnings the stock comes back $100 per share = 1400 * $100 = $140,000

IF it loses 30% two more time

Stock $49 = 1960 but we’d be at 1900

And Then to $34.30 = 2660 but we would be at 2600 share

AND now the stock only goes back to $70 * 2600 = $182,000

 

What are we in right now? Stock pricing cycle??????

Market is still bullish, Some of our stocks are bullish and some are not

For those that are not bullish we are waiting = BAC, BA, BIDU, DIS, F, SQ, UAA, MU

Some have moved = AAPL, META, JPM, MRO

Stocks with protection = UAA @$9, SQ, DIS, BA

 

Intrinsic and Extrinsic Value

Intrinsic = In the money Right to sell @$100 and the stock is trading at $70 = $30 Intrinsic Value

Extrinsic = Extra or time value = $5.50 per share

 

For this week= FOMC Rate Meeting – NOT CUTTING RATES

July looks like the first cut due to Powell’s GOP Testimony

 

 https://www.briefing.com/the-big-picture

The Big Picture

Last Updated: 14-Mar-24 15:29 ET | Archive

Lots of loose ends to deal with

In approximately two weeks, the first quarter of 2024 will come to an end. Per usual, there have been a share of surprises for the stock market — some good, some bad, and some that are indeterminate.

  • AI chip leader NVIDIA (NVDA) has gained as much as 97%. That’s good.
  • EV leader Tesla (TSLA) has dropped as much as 35%. That’s bad.
  • Inflation has come down a bit, but it has a way to go to reach the Fed’s 2% target. That’s indeterminate.

There are a lot of loose ends out there on the geopolitical, economic, monetary policy, fiscal policy, and election fronts. By default, that means there are loose ends out there, too, for the stock market. Nonetheless, the stock market has been running with a sense of ease so far in 2024.

The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have all set new record highs. Small-cap, mid-cap, and large-cap indices are all higher for the year, albeit in varying degrees. Growth stocks are up, but so are value stocks.

In brief, the stock market has been governed by a bullish bias so far in 2024 amid the surprises and the ongoing loose ends, more of which can be expected in coming months. What that means for the stock market’s performance over the coming months will depend on which way the surprises break and how those loose ends get tied up — or don’t.

No Threat Yet

Arguably, the biggest surprise so far in 2024 has been the shift in the market’s rate cut outlook. Carrying that idea a bit further, the biggest surprise is that the stock market has run to record highs even though the market has adjusted its thinking to expect three rate cuts before the end of the year instead of the six rate cuts expected when 2024 began.

Although there has been a downshift in rate cut expectations, we suspect the stock market hasn’t downshifted because it hasn’t felt a threat to the earnings outlook.

On the whole, economic data has come in with a soft landing/no landing glow to it. Accordingly, analysts have not been given a data-based reason to cut their full-year earnings outlook in any meaningful way. When the year began, the consensus FY24 S&P 500 EPS estimate was $243.32. Today, it sits at $242.79, according to FactSet, which is 11.1% above FY23 earnings versus 11.4% when the year began.

The forward 12-month EPS estimate, meanwhile, has climbed to $249.31 from $243.19 at the end of 2023. The corresponding P/E multiple is 20.7x. That is a 17% premium to the 10-year average.

In other words, there has been multiple expansion with the price of the market-cap weighted S&P 500 rising at a faster rate than the earnings estimate. As of this writing, the market-cap weighted S&P 500 is up 8.0% for the year. It is pricey from a valuation standpoint, which is its own restrictive factor as market participants concern themselves with paying too much for earnings growth that might not be realized.

That is a key reason why it is important for earnings estimates to keep going up, because a market (or an individual stock) trading at a premium valuation is at risk of a stronger dislocation if negative surprises appear that upend the earnings growth outlook.

The valuation constraint for the equal-weighted S&P 500 is a lot less demanding. It trades at 16.8x forward 12-month earnings versus a 10-yr average of 16.4x. The discount to the market-cap weighted S&P 500 underscores the outsized influence of the mega-cap stocks on the market-cap weighted S&P 500.

Bull Market Behavior

Notwithstanding the valuation gap, the stock market has been seeing some welcome rotation into other corners of the market. Granted the communication services (+12.2%) and information technology (+12.0%) sectors have paced year-to-date gains for the market, but the first half of March has seen the energy, materials, utilities, and consumer staples sectors exhibit relative strength. The same goes for the Russell 3000 Value Index versus the Russell 3000 Growth Index.

The rotation has occurred as some of the so-called Magnificent 7 stocks have faltered, namely Apple (AAPL) and Tesla (TSLA). This is actually a good sign. It is the type of behavior one would expect to see in a bull market.

Former leadership stocks breaking down could be construed as an ominous trend for the broader market, but thus far the earnings results and outlooks from other mega-cap stocks have enabled investors to excuse shortcomings elsewhere as an isolated situation. Therefore, it would appear that stocks elsewhere are benefiting at the expense of a rotation away from the likes of Apple and Tesla, although it would be remiss not to add that NVIDIA and the semiconductor stocks have been among those beneficiaries on a momentum trade that has been of great benefit to the market.

In any case, the look and feel of the gains so far in 2024 still has a mega-cap/growth stock edge to it, but it is not devoid of participation from other parts of the market. That, again, can be attributed to the resilient economy, which is fostering some renewed attention on value stocks and/or stocks outside the information technology sector.

Eye on Inflation

Where there is plenty of attention is on the inflation story. It is much improved, but the Federal Reserve is looking for more (as are consumers).

The PCE Price Index, which is the Fed’s preferred inflation gauge, was up 2.4% year-over-year in January versus 2.6% in December. The core-PCE Price Index, which excludes food and energy, and which is what the Fed feels it has some control over with its policy actions, was up 2.8% year-over-year in January versus 2.9% in December.

The Fed’s inflation target is 2.0%, so these readings remain above target, but are headed in the right direction. The Fed has noted as much, but still wants to have more confidence that inflation is moving back to 2.0% on a sustainable basis. Notably, Fed Chair Powell said in his semiannual monetary policy testimony that the Fed doesn’t necessarily need to see better data in coming months, only more of the same data it has seen recently to feel inflation is on track to its 2% target.

The market thinks the Fed will get that, which is another reason stocks have remained in favor on the comforting thought that the Fed will soon start dialing back its restrictive policy. The prevailing expectation is that the first rate cut will come at the June FOMC meeting. The CME FedWatch Tool shows a 59.9% probability of the first cut in June, but that is down from 73.6% only a week ago as some sticky CPI and PPI data for February have tempered things a bit.

Thus far, the market has managed the idea of seeing fewer rate cuts this year reasonably well. A risk in this regard would be even fewer rate cuts or no rate cuts at all if the inflation data heat up and move away from the 2.0% target, possibly even causing the Fed to raise rates again.

Rates Rising

The Treasury market has been a bit more skittish to begin the year than the stock market has been. That’s because (1) it has recalibrated for fewer rate cuts and (2) recent inflation data hasn’t been as encouraging as expected.

The 2-yr note yield, which began the year at 4.25% and is more sensitive to changes in the fed funds rate, has risen to 4.69%. The 10-yr note yield, which began the year at 3.88% and is more sensitive to inflation, has risen to 4.30%. That move has also stymied the improvement that had been seen in mortgage rates, which has continued to pressure the housing market.

Higher interest rates can be a headwind for the stock market, yet the move since the start of the year has been tolerated because the momentum that has powered stocks like NVIDIA, and other assets like bitcoin, has been hard to compete with, relative to much lower returns offered by Treasuries, for investors aiming for, and achieving, much higher rates of return.

It may take risk-free rates closer to 5.00% to cause some real pullback waves in the stock market.

What It All Means

It was a fast start to the year for many of the mega-cap stocks, which in turn made for a fast start for the market-cap weighted S&P 500 and Nasdaq Composite. Naturally, there are now a lot of calls that suggest the market is due for a consolidation period or correction (generally defined as a 10% pullback from a high).

The churning we have been seeing in the market more recently is part of a consolidation process, but a corrective move at the index level has yet to unfold.

Still, the market has come a long way in a short time, so it is unreasonable to think it will keep running at the pace it has been. The valuation for the market-cap weighted S&P 500 is stretched, but for the equal-weighted S&P 500 it is still in relatively attractive form.

There could be great reward chasing after the momentum stocks, but there is an inherently larger degree of risk in doing so at this point if the crowd looks elsewhere, interest rates keep rising, or growth disappoints.

To be sure, no one knows what surprises lurk around the corner, but right in front of investors is an equal-weighted opportunity to stay invested with a lower risk profile as loose ends get tied up.

Patrick J. O’Hare, Briefing.com

 

 

 

Earnings dates:

MU              3/20 AMC

 

Where will our markets end this week?

Lower

 

DJIA – Bullish

SPX –Bullish

COMP – Bullish

 

 Where Will the SPX end March 2024?

03-18-2024            -2.0%

03-11-2024            -2.0%

03-04-2024            -2.0%

 

Earnings:   

Mon:           

Tues:            TME,

Wed:            GIS, BB, CHWY, FIVE, GES, KBH, MU

Thur:           DRI, FDX, LULU, NKE

Fri:               

 

 

Econ Reports:

Mon:            NAHB Housing Market Index,

Tue              Housing Starts, Building Permits,

Wed:            MBA, FOMC Rate Decision

Thur:           Initial Claims, Continuing Claims, Current Account Balance

Fri:              

 

How am I looking to trade?

current long put protection ITM

 

www.myhurleyinvestment.com = Blogsite

info@hurleyinvestments.com = Email

 

Questions???

 

 

https://www.cnbc.com/2024/03/17/talk-of-recession-is-dying-down-in-corporate-america.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

Talk of recession is dying down in corporate America

PUBLISHED SUN, MAR 17 20247:41 AM EDTUPDATED SUN, MAR 17 202410:23 AM EDT

Alex Harring@ALEX_HARRING

KEY POINTS

  • The word ‘recession’ is coming up far less frequently on earnings calls for companies in the S&P 500, data shows.
  • That comes as market participants grow increasingly optimistic that price growth has been restrained without the economy tipping over into a contraction.

Discussion around the potential for a recession is becoming less common among American business executives.

Ever since the Federal Reserve began raising interest rates in early 2022, corporations and investors have braced for how a recession might play out. Now, the topic is losing its luster on earnings calls held by the largest U.S. companies as it becomes increasingly likely that inflation has been cooled without causing an economic contraction.

The word recession came up on the fourth-quarter earnings calls of 47 companies in the S&P 500, according to market data platform FactSet. That’s the lowest number since the end of 2021.

Another way of looking at it: Compared with the same three-month period a year ago, the word was mentioned on less than one-third of the number of calls.

And despite coming off a period plagued with economic concerns, the fourth-quarter stat came in below the five- and 10-year averages of 85 and 61, respectively.

Sweeter chatter

When recession chatter did come up, the tune was often sweeter. Executives pointed to a better macroeconomic environment than what they saw in prior quarters.

Everyone “seems to be more optimistic this time this year compared to this time last year,” said John Wall, the finance chief of technology company Cadence Design Systems. “At this time last year, everyone was asking me, ‘When was the recession going to happen?’”

The gross domestic product grew at a rate of 3.2% in the final quarter of 2023. While down from the prior three-month period, the measure of all goods and services clearly showed the economy dodging a recession once considered all but unavoidable.

Cadence’s Wall isn’t alone in his confidence. Almost half of the more than two dozen finance chiefs surveyed by CNBC said they expect the Federal Reserve to control inflation without a recession, a scenario known as a soft landing. Another nearly 15% of respondents to CNBC’s CFO Council survey said they believed a recession had already taken place.

Improved sentiment came as almost three out of every four companies surpassed Wall Street expectations in the latest quarter, according to FactSet.

One was commercial real estate developer CBRE, which topped analysts’ consensus estimates for revenue and income in its fourth quarter. CFO Emma Giamartino said the Dallas-based company’s full-year 2024 guidance is “contingent” on the Fed cutting short-term interest rates and the economy skirting a recession.

For the full year, CBRE forecasts between $4.25 and $4.65 in core earnings per share. But Giamartino said much more of that than usual will come in the second half of the year, coinciding with when the central bank is now expected to start easing back on interest rates.

Eye on the consumer

In recent years, consumer-facing businesses have monitored customer behavior for signs of weakness as inflation has pinched pocketbooks.

At Costco, the wholesale club said its Kirkland Signature store brand had seen increased popularity when shoppers prioritized value amid rising prices. But CFO Richard Galanti said the trade-down trend was short-lived.

“People were, in my view, switching a little bit out,” Galanti told analysts earlier this month. “But that’s changed. We don’t see that as much anymore.”

Extra Space Storage said demand has held up as customers juggle living situations, especially with 30-year mortgage rates sitting near 7%. Almost half of storage users said they are getting units as they move between apartments, according to CEO Joseph Margolis.

“The housing market certainly will help, but it’s not the sole driver of demand for self-storage,” Margolis said on the Salt Lake City-based firm’s call with analysts late last month. “More transition is just good.”

Extra Space is cautious about anticipating lower interest rates too soon. In drafting guidance for future financial performance, the company doesn’t expect levels to come down in time to boost the summer housing market.

Still, Margolis acknowledged that avoiding economic contraction is good for business. Extra Space was one of 37 S&P 500 companies using the term soft landing during fourth-quarter earnings calls, the highest number in at least three years, according to FactSet data.

“A strong economy is always better than a weak economy,” Margolis said. “All indications are now that we’re going to have more of a soft landing than a recession.”

Improving dealscape

After higher interest rates led to a slump in mergers and acquisitions, executives wonder if 2024 can mark a rebound for deal volume if the cost of borrowing drops.

Host Hotels said the transaction market can benefit as improved macroeconomic sentiment leads to more visibility on operating performance. The upscale hotel investor said that with $2.9 billion in total liquidity, it’s well-positioned to make acquisitions.

That’s an outlook shared across sectors ranging from real estate to technology. Asphalt and concrete maker Vulcan Materials, for example, called 2024 a year of “catch-up” in the space.

“While it was pretty quiet in 2023 with a lot of unknowns out there, I think it will be very busy in 2024,” CEO J. Thomas Hill said of the merger and acquisition environment. “I would expect us to bring some deals to the finish line.”

‘Difficult to predict’

To be sure, some executives are less sure they’re in for a stronger year, even if a recession has been avoided.

It’s “still very difficult to predict” when demand for home improvement products will pick up, Lowe’s CEO Marvin Ellison said. Though growing expectations of a soft landing are grounds for optimism, he said it’s unclear how long it would take for consumers to shift spending habits even after interest rates start to retreat.

Depressed home sales remain a cause for concern, Ellison said. Mortgage levels are still too high to encourage those locked in at lower rates to move, he said, which is typically a natural catalyst for home improvement spending.

The North Carolina-based retailer has also been hurt as Americans opt to spend on experiences like travel, football games or concerts rather than goods after the pandemic, according to the chief executive.

“The consumer is financially healthy, but in this post-pandemic timeframe, customers are still showing a preference for spending on services,” Ellison told analysts late last month. “While we anticipate these trends will normalize, the timing is uncertain.”

 

https://www.cnbc.com/2024/03/18/china-retail-sales-industrial-data-for-first-2-months-beats-expectations.html

China kicks off the year on strong note as retail, industrial data tops expectations

PUBLISHED SUN, MAR 17 202410:12 PM EDTUPDATED 11 MIN AGO

Evelyn Cheng@IN/EVELYN-CHENG-53B23624@CHENGEVELYN

KEY POINTS

  • Retail sales rose 5.5%, better than the 5.2% increase forecast in a Reuters’ poll, while industrial production increased 7%, compared with estimates of 5% growth.
  • Fixed asset investment rose by 4.2%, more than the forecast of 3.2%.
  • Online retail sales of physical goods rose by 14.4% from a year ago during the first two months of the year.

BEIJING —  China’s economic data for the first two months of the year beat analysts’ expectations across the board on Monday.

Retail sales rose 5.5%, better than the 5.2% increase forecast in a Reuters poll, while industrial production climbed 7%, compared with estimates of 5% growth.

Fixed asset investment rose by 4.2%, more than the 3.2% estimated by analysts.

The unemployment rate in February for cities came in at 5.3%.

Online retail sales of physical goods rose 14.4% from a year earlier during the first two months of the year.

Investment into real estate fell 9% in the first two months of the year from a year ago. Investment in infrastructure rose by 6.3% while those in manufacturing increased by 9.4% during that time.

“We believe China’s sequential growth momentum remained solid in Q1 despite notable divergence across sectors,” Goldman Sachs analysts said in a report Monday following the data release.

“However, to secure the ambitious “around 5%” growth target this year, more policy easing is still necessary, especially on the demand-side (e.g., fiscal, housing and consumption).”

Despite the upbeat results, National Bureau of Statistics Spokesperson Liu Aihua cautioned that domestic demand remains insufficient.

She told reporters that real estate remains in a period of “adjustment,” and that the overall economy is “in a critical period of recovery, transformation and upgrading,” according to a CNBC translation of her comments in Mandarin.

When asked about the unemployment rate for people aged 16 to 24, Liu said the figures would be released a few days after the monthly press conference on economic data.

Holiday boost

Economic figures for January and February are typically combined in China to smooth out variations from the Lunar New Year, which can fall in either month depending on the calendar year. It is the country’s biggest national holiday, in which factories and businesses remain closed for at least a week.

This year, the number of domestic tourist trips and revenue during the holiday grew compared with last year as well as pre-pandemic figures from 2019. But Nomura’s Chief China Economist Ting Lu pointed out that “average tourism spending per trip was still 9.5% below pre-pandemic levels in 2019.”

Retail sales did not rebound from the pandemic as strongly as many had expected as consumers have grown uncertain about their future income.

“Consumers were buoyed temporarily by festivities-related spending at this start of the year. In the absence of decisive consumption-related stimulus this year, we think it would be difficult to sustain a robust consumer spending pace this year,” Oxford Economics’ Chief Economist Louise Loo said in a report on Monday.

Lackluster demand

New loans in February missed expectations and fell from the prior month, “even after adjusting for seasonality,” Goldman Sachs analysts said in a report on Friday.

“The persistent weakness in property transactions and low consumer sentiment may continue to weigh on household borrowing,” the analysts said. “More monetary policy easing is needed.”

People’s Bank of China Governor Pan Gongsheng said earlier this month there was still room to cut the reserve requirement ratio, or the amount of cash banks need to have on hand.

Goldman expects 25 basis point cuts to that ratio in the second quarter of this year, as well as in the fourth quarter.

Real estate, which accounts for a significant part of household assets, has slumped over the last few years after Beijing’s crackdown on developers’ high reliance on debt for growth.

The average property price for 70 major Chinese cities fell by 4.5% in February from January on a seasonally adjusted, annualized basis, according to Goldman Sachs’ analysis using a weighted average of official figures.

That’s steeper than the 3.5% month-on-month drop in property prices in January, Goldman Sachs said.

“Our high frequency tracker suggests that 30-city new home transaction volume declined by 53.2% [year-on-year] in early March after adjusting to the lunar calendar basis,” the analysts said in a report.

Focus on manufacturing

Chinese authorities did not reveal significant new support for the massive real estate sector during an annual parliamentary meeting that ended last week.

Instead, Beijing emphasized the country’s focus on developing manufacturing and technological capabilities.

When asked Monday about overcapacity concerns, Liu said that China’s manufacturing capacity utilization rate was 76% in the fourth quarter, a 0.2 percentage point increase from a year earlier.

She described efforts to increase the level of high-end manufacturing a “strategic decision for achieving high-quality development,” while noting that efforts are needed to prevent inefficient and ineffective investments in the sector.

Data earlier this month showed China’s exports for January and February rose by 7.1% in U.S. dollar terms, beating expectations for a 1.9% increase.

Imports climbed by 3.5% during that time, also topping Reuters’ forecast for growth of 1.5%.

 

https://www.cnbc.com/2024/03/18/apple-in-talks-to-license-googles-gemini-for-generative-ai-bloomberg.html

Alphabet shares up 7% on report Apple is in talks to license Gemini AI for iPhones

PUBLISHED MON, MAR 18 20243:07 AM EDTUPDATED 34 MIN AGO

Lim Hui Jie

KEY POINTS

  • Alphabet shares were trading more than 7% on Monday morning after Bloomberg reported that Alphabet and Apple were “in active negotiations” for Gemini to power some features coming to the iPhone this year.
  • Apple shares were up more than 2%.

Alphabet shares rose more than 7% Monday morning following a report that tech giant Apple is in talks to license Gemini for future iPhones. Apple shares were up more than 2%.

Gemini is Google’s suite of generative artificial intelligence tools, ranging from chatbots to coding assistants.

According to a Bloomberg report, Apple is in talks with Alphabet-owned Google to let the iPhone maker license and build its Gemini AI engine into the iPhone.

Citing people familiar with the matter, Bloomberg said the two tech giants are “in active negotiations” for Gemini to power certain new features due to be released to the iPhone software later this year.

Apple’s next big iPhone update, iOS 18, is expected during its Worldwide Developers Conference. That’s when the company may talk more about its plans for generative artificial intelligence and when it usually talks about its latest iPhone software before it rolls out to consumers in the fall.

Apple CEO Tim Cook said the company is “investing significantly” in AI during the company’s annual shareholder meeting in February.

“Later this year, I look forward to sharing with you the ways we will break new ground in generative AI, another technology we believe can redefine the future,” Cook said.

The company also recently held discussions with OpenAI and has considered using its model, according to the sources cited by Bloomberg.

However, the report said, “the two parties haven’t decided the terms or branding of an AI agreement or finalized how it would be implemented.”

CNBC could not independently verify the Bloomberg report. Apple declined to comment and Alphabet did not immediately respond when contacted by CNBC.

 CNBC’s Katrina Bishop contributed to this report.

 

https://www.cnbc.com/2024/03/16/worst-paying-college-majors-five-years-after-graduation.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

The 16 worst-paying college majors, five years after graduation

Published Sat, Mar 16 20249:00 AM EDT

Mike Winters@MIKE_WINTRS

Students who major in liberal arts, performing arts and theology earn the lowest salaries within five years of graduating from college, a recent New York Federal Reserve analysis reveals.

All three majors made a median annual income of $38,000, the lowest out of the 75 majors in the study. Other low-paying majors include leisure and hospitality, history, fine arts and psychology, all of which made $40,000 or less per year.

For context, that’s slightly less than the U.S. personal income median of $40,480 as of 2022, per the latest data available from the U.S. Census.

Here’s a look at what the lowest-paying majors earn early in their careers.

With liberal arts degrees, graduates tend to get paid less overall, for various reasons. For one, their skills may not be directly related to generating revenue, even if their vocation is a benefit to society.

Or, it can be a case of too few well-paying jobs compared with the number of graduates each year, as is the case for fine arts degrees. As such, the lack of demand can drive down wages.

Education majors tend to be paid less, as well. While teachers have good job security, summers off and pensions, they’re usually paid by state governments, which have lagged in keeping wages commensurate with inflation. In recent years, the “teacher pay penalty” has gotten worse, according to the Economic Policy Institute.

Unfortunately for teachers, they don’t fare much better later in their careers. When looking at “mid-career” graduates — those ages 35 to 45 — education majors are the worst paid among all majors.

Here’s a look at the mid-career rankings.

Early childhood education majors in the middle of their careers earn the least out of all majors. With a median annual income of $48,000, they only make $8,000 more than they do right after graduation.

In contrast, the highest-paid majors for both early and mid-career earners tend to be in science, technology, engineering and mathematics, otherwise known as STEM fields.

Engineers earn the highest median income right after college, with computer engineers ranked first at $80,000 per year. Their pay grows to $133,000 by the time they’ve reached the ages of 35 to 45, the highest of all majors.

It’s worth mentioning that mid-career graduates all make more than the U.S. personal income median of $40,480. The median pay for all mid-career majors is $75,500, according to the New York Fed.

Data for this annual study was compiled from U.S. Census data from 2022, the most recent available. The study excludes majors currently enrolled in school and is limited to a working-age population of those ages 25 to 65 who work full-time, with a bachelor’s degree or higher.

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The 16 worst-paying college majors, five years after graduation

Published Sat, Mar 16 20249:00 AM EDT

Mike Winters@MIKE_WINTRS

Students who major in liberal arts, performing arts and theology earn the lowest salaries within five years of graduating from college, a recent New York Federal Reserve analysis reveals.

All three majors made a median annual income of $38,000, the lowest out of the 75 majors in the study. Other low-paying majors include leisure and hospitality, history, fine arts and psychology, all of which made $40,000 or less per year.

For context, that’s slightly less than the U.S. personal income median of $40,480 as of 2022, per the latest data available from the U.S. Census.

Here’s a look at what the lowest-paying majors earn early in their careers.

College majors that pay the least right after college

Median salary within five years of graduation

The table shows the top 10 college majors for 2024 that pay the least within the first five years of graduation.

Table with 2 columns and 16 rows.
Liberal arts $38,000
Performing arts $38,000
Theology + religion $38,000
Leisure + hospitality $39,700
General social sciences $40,000
History $40,000
Miscellaneous biological science $40,000
Fine arts $40,000
Treatment therapy $40,000
Nutrition sciences $40,000
Psychology $40,000
Anthropology $40,000
Family + consumer sciences $40,000
Social services $40,000
Elementary education $40,000
Early childhood education $40,000

 

With liberal arts degrees, graduates tend to get paid less overall, for various reasons. For one, their skills may not be directly related to generating revenue, even if their vocation is a benefit to society.

Or, it can be a case of too few well-paying jobs compared with the number of graduates each year, as is the case for fine arts degrees. As such, the lack of demand can drive down wages.

Education majors tend to be paid less, as well. While teachers have good job security, summers off and pensions, they’re usually paid by state governments, which have lagged in keeping wages commensurate with inflation. In recent years, the “teacher pay penalty” has gotten worse, according to the Economic Policy Institute.

Unfortunately for teachers, they don’t fare much better later in their careers. When looking at “mid-career” graduates — those ages 35 to 45 — education majors are the worst paid among all majors.

Here’s a look at the mid-career rankings.

College majors that pay the least for mid-career workers

Median salary for graduates who are 35-45 years old

The table shows the top 10 college majors for 2024 that pay the least for mid-career workers.

Table with 2 columns and 16 rows.
Early childhood education $48,000
General education $52,000
Elementary education $52,000
Secondary education $55,000
Miscellaneous education $56,000
Social services $56,000
Theology + religion $56,000
Special education $57,000
Family + consumer sciences $59,000
Performing arts $64,000
Health services $65,000
Nutrition sciences $65,000
Psychology $65,000
Anthropology $65,000
Liberal arts $65,000
Foreign language $66,000

 

Early childhood education majors in the middle of their careers earn the least out of all majors. With a median annual income of $48,000, they only make $8,000 more than they do right after graduation.

In contrast, the highest-paid majors for both early and mid-career earners tend to be in science, technology, engineering and mathematics, otherwise known as STEM fields.

Engineers earn the highest median income right after college, with computer engineers ranked first at $80,000 per year. Their pay grows to $133,000 by the time they’ve reached the ages of 35 to 45, the highest of all majors.

It’s worth mentioning that mid-career graduates all make more than the U.S. personal income median of $40,480. The median pay for all mid-career majors is $75,500, according to the New York Fed.

Data for this annual study was compiled from U.S. Census data from 2022, the most recent available. The study excludes majors currently enrolled in school and is limited to a working-age population of those ages 25 to 65 who work full-time, with a bachelor’s degree or higher.

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