Q2 2024 Stock Market Commentary

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The second quarter of 2024 saw the stock market continue its recovery from the challenges of the previous year when the Federal Reserve was aggressively raising interest rates to combat high inflation. The Federal Reserve has indicated it is more likely that their next move will be to lower rates, impacting short-term interest rates like money market and bank savings rates and mortgage rates as well. Time will tell and the Federal Reserve will be economic data dependent on any moves from this point forward. Here are the key highlights from the second quarter of 2024 and a look forward:

Market Performance

  • The S&P 500 gained 5.5% this quarter, bringing its year-to-date return to 14.4%.
  • Technology and Energy sectors continue to lead the charge, while consumer stocks lagged.

Economic Factors

  • Inflation continued to moderate, with the latest CPI reading at 3.3% year-over-year.
  • The Federal Reserve maintained its cautious stance, keeping interest rates steady.
  • Unemployment remained low at 3.9%, indicating a resilient job market.

Global Developments

  • Trade tensions between the U.S. and China eased, boosting investor confidence.
  • European markets showed signs of improvement, with the EU’s economic growth picking up.
  • We continue to urge investors to focus their portfolio investments on US based companies versus companies based outside the US.

Looking Ahead

  • Inflation Trajectory: The path of inflation will continue to influence Fed policy and market sentiment.
  • Interest Rate Decisions: Any shifts in the Federal Reserve’s stance on interest rates could have significant market implications.
  • Corporate Earnings: The upcoming earnings season will provide crucial insights into company performances and economic health. Technology earnings are expected to continue to lead.
  • Global Economic Recovery: The pace and consistency of global economic recovery will impact market dynamics and we expect it to be slower than US growth.
  • Geopolitical Developments: Ongoing international relations and potential conflicts may affect market stability.
  • Tax Outlook: If Congress does not act, the current tax law is set to expire on 12/31/2025, meaning nearly everyone’s tax rates will be higher in 2026.

Overall, the market demonstrated resilience and discounted a strong US economy this quarter, supported by improving economic conditions and positive corporate outlooks. As always, maintaining a diversified portfolio aligned with your long-term goals remains crucial. Please remember that past performance is not indicative of future results.

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