two orange squash closeup photo by Maciej Rusek courtesy of Unsplash.

October 2024 Market Perspective

Bill Hastie, Managing Partner |

Investors not only survived, but flourished, in September which historically is the most volatile month of the year.  With the Federal Reserve’s first cut in interest rates since March 2020 coming last month, with a 0.50% (or 50 basis points) cut, the investment markets applauded. In summary:

  • Stocks Rallied in September to Cap Off a Strong Third Quarter

    Stocks continued to rise in September as improving fundamentals and lower interest rates bolstered investment returns.

  • Strong Quarter for Bonds

    Declining interest rates pushed bonds prices up making for a strong month of September and third quarter for bond investors.

  • Healthy Economic Backdrop

    Economic reports during the month of September showed signs of continued growth.

  • Real Risks Remain

    Markets face a variety of risks as we approach the fourth quarter.

  • Cautious Optimism Warranted

    We believe the most likely path forward is for continued market and investment price appreciation and economic growth, with possible volatility around the Presidential election and the path of future interest rates.

     

Stocks continued their recent rally in September with all three major stock indices gaining ground for the month and the third quarter.  The S&P 500 rose 2.14% in September and 5.89% for the quarter, while the Dow Jones Industrial Average gained 1.96% and 8.72% for the month and quarter, respectively. Both the S&P 500 and Dow hit new record highs in September before retreating by the end of the month.

The technology-heavy NASDAQ gained 2.76% for both the month and quarter as technology stocks experienced heightened turbulence over the summer compared to the broader stock market.

September was another positive month for the U.S. bond market.  Falling interest rates during September and the third quarter helped support bond returns throughout the summer.  The 10-year Treasury yield fell from 4.48% in early July to 3.81% by the end of September. The Bloomberg U.S. Aggregate Bond Index gained 1.34% for the month and 5.20% for the third quarter.

While we are cautiously optimistic about the investment markets going forward, risks still remain.  The primary risk domestically is a future economic slowdown in the months ahead. The labor market will be the key indicator to watch here, as any additional weakness could be a sign of potential slowing economic growth.  Additionally, political uncertainty is expected to continue to rise as we approach the November elections.

Market fundamentals remain sound, and the economic backdrop is expected to be broadly supportive through the end of the year. The headwind from high interest rates that we have experienced over the past two years is set to transition to a tailwind in the months ahead as the Federal Reserve is widely expected to continue to cut interest rates.

Should you have any questions, or wish to further discuss any issues discussed above, please contact our office at (831) 422-4910.