Volatility has returned to Wall Street, with the post-election euphoria ebbing over the past week as fresh data showed inflation rising more than expected in November. The Federal Reserve’s two-day policy meeting will take place this week, with hopes building on another rate cut. However, concerns have grown over the Federal Reserve’s future rate cuts.

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Given this situation, it would be ideal to invest in value funds like Northern Income Equity NOIEX, T. Rowe Price Value TRVLX and Dodge & Cox Stock I DODGX.

The Commerce Department said last week that the consumer price index (CPI) climbed 0.3% sequentially in November, registering its biggest gain since April, after increasing 0.2% for four consecutive months. On a year-over-year basis, CPI rose 2.7%. Core CPI, which strips out the volatile food and energy costs, also rose 0.3% sequentially in November and 3.3% from the year-ago levels.

Both CPI and core CPI came in line with expectations. Several investors believe that inflation is still not that high, which has kept the optimism surrounding a 25-basis point rate cut in December intact. However, a large section fears that the Fed could slow its pace of rate cuts in 2025, given that inflation is still quite high from the Fed’s 2% target.

The Wall Street rally, which gathered pace following Donald Trump’s landmark win in the U.S. presidential election in November, saw all three major indexes hitting new all-time closing highs. However, the rally appears to have come to a halt.

On Monday, the Dow recorded its eighth straight day of losses. Last week, the Dow lost 1.8%, while the S&P 500 and the Nasdaq finished 0.6% and 0.3% lower, respectively. Investors are currently trying to gauge the Federal Reserve’s future rate cut plans. The Fed already indicated last month that although rate cuts will happen in 2025, the pace will be slower. Higher borrowing costs could make markets volatile for a longer period.

We’ve identified three large-cap value mutual funds that have demonstrated impressive annualized returns over 3-year and 5-year periods. These funds also hold a Zacks Mutual Fund Rank of #1 (Strong Buy), require an initial investment of no more than $5,000 and have a low expense ratio.

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The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

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