squash near hey by Joseph Gonzalez courtesy of Unsplash.

November 2024 Market Perspective

Bill Hastie, Managing Partner |

Coming as no surprise to many investors, October was a challenging month in the global investment markets. In the month following the Federal Reserve’s first interest rate cut in more than four years, the markets consolidated and recaptured some of its recent gains. In summary:

  • Stocks Slid in October
    A late-month sell-off led to a down month for stocks.
  • Bonds Fell in October
    Rising interest rates (Treasury yields) caused bonds to fall during the month.
  • Surprising Resilient Economic Growth
    The economic updates released in October showed signs of economic resiliency.
  • Risks to Monitor
    Markets face a variety of risks as we head to the end of the year.
  • Positive Outlook Ahead
    The most likely path forward is for continued market appreciation and economic growth.

For the month of October, the S&P 500 and the NASDAQ dropped 0.91% and 0.49%, respectively, while the Dow Jones Industrial fell 1.26%. Concerns about future growth prospects for large capitalization (cap) technology companies acted as a headwind for stocks during the month. International stocks fared even worse than their U.S. counterparts. The MSCI EAFE Index fell 5.44%, and the MSCI Emerging Markets Index dropped 4.32% for the month.

Despite the poor performance results in October, we saw improving fundamentals to start earnings season. According to Bloomberg Intelligence, as of October 31, with roughly two thirds of companies having reported actual earnings, the average earnings growth for the S&P 500 in the 3rd quarter was 7.4%. This is well above analyst earnings estimates at the start of earnings season for a more modest 4.2% increase. Since fundamentals ultimately drive long-term market performance, this was an encouraging development for investors.

The U.S. bond market, which has struggled since early 2022 when the Federal Reserve began rapidly raising interest rates, began to show signs of gaining momentum early this summer. But this streak of positive performance came to an end in October as rising interest rates (Treasury yields) hit bond prices. The rise in interest rates during the month were due in part to a pullback in trader expectations for additional interest rate cuts.

Our Perspective

While there are still certainly risks that investors should keep in mind, on the whole, we feel the long-term outlook is positive given the solid fundamentals and relatively strong economy. Companies continue to show signs of solid earnings growth while the recent economic updates have been encouraging. And although interest rates rose last month, the Federal Reserve cut rates by another 0.25% (or 25 basis points) at their November 6th and 7th meeting. So, what was a headwind in October is likely to transition to a tailwind as we move toward 2025.

We continue to evaluate our portfolio holdings and allocations as we monitor on-going performance, and plan to make any changes deemed necessary in January. If you have any questions about your investment holdings or our investment strategy going into 2025, please let us know. We can schedule a time to meet and discuss.

 

All indices are unmanaged, and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.