Market Commentary: Q3 2024

October 9, 2024
Image of friends happily eating dinner together.

U.S. stocks extended their strong performance from the first half of the year, with many market indices reaching or nearing record highs as the third quarter drew to a close. This marks the fourth consecutive quarter of positive returns for stocks, with 12 respective all-time highs during the quarter. Year-to-date, the S&P 500 is up 22%, its best start to a year since 1997.

The Fed & Interest Rates

After months of speculation, the Federal Reserve reduced interest rates in September as core inflation eased. The Fed’s half-percentage point cut to the federal funds rate, bringing it to the 4.75%–5% range, was motivated by concerns over an uncertain economic outlook and a rise in unemployment. This marked the first rate cut since the COVID-related market turmoil of March of 2020. The Fed’s decision followed inflation hitting its lowest level since 2021, with the August core Consumer Price Index (CPI), which excludes volatile food and energy prices, rising 3.2% year-over-year. The Fed is focused on maintaining stable employment levels without reigniting inflationary pressures.

Presidential Election

As market activity surged, the U.S. presidential election looms, with a late shake-up on the Democratic ticket altering the race’s dynamics. National polls indicate a tight contest, with no clear front-runner heading into Election Day. While political outcomes can evoke strong emotions, it’s important for investors to remember that history shows that the president and respective presidential party are just one of many factors influencing the stock market at any given point in time. As highlighted in our September webinar with Apollo Lupescu of Dimensional Fund Advisors, stocks have generally trended higher (Chart 1) regardless of who is in office. In a time of heightened passions, it’s a reminder that taking the long-term view can provide reassurance.

Chart 1: Annualized Market Returns During Presidential Terms – S&P 500 Index

Annualized Market Returns During Presidential Terms – S&P 500 Index
Each president’s annualized return begins with the first full month of returns of presidency. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Index Returns are not representative of actual portfolios and do not reflect costs and fees associated with an actual investment. Actual returns may be lower.
Source: S&P data © 2019 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved.

The Importance of Strategy Over Speculation

Recent market performance has once again emphasized the limitations of short-term predictions. A year ago, many analysts expected multiple Fed rate cuts in 2024 and projected much lower market returns. However, the reality has been quite different—fewer rate cuts and a much stronger stock market performance than anticipated.

This discrepancy underscores the value of focusing on personalized, long-term investment
strategies to get you where you’re invested, rather than attempting to predict short-term market movements and fluctuations.

Market Summary

Quarter 3 & Year-to-Date 2024 Index Returns

Past performance does not guarantee future results.

Invest Where it Really Counts

As we venture into the fourth quarter of 2024, we have just one more month of election related noise to contend with, and the geo-political conflicts in hotspots around the world are no closer to being resolved. Throughout the noise, we hope to continue to see both economic growth and softening inflation. Stay the course and remain focused on the long-term, the reasons you chose to invest, and the things you can control. Our team is prepared to navigate you through any volatility that may arise. We thank you for trusting Petersen Hastings Wealth Advisors to help you discover where you’re most invested in life and build you the financial freedom to live it.