Markets began the second quarter with a reprieve from the 18-month tear they had been on. By the third week in April, global equities were down 5% from where they began the quarter. However, their fortunes reversed as they rallied 7.5% over the ensuing 10 weeks to finish the quarter up 2.5%.
Bonds had a similar start to the quarter as stocks, with hotter than expected inflation causing interest rates to rise 0.50% and bond prices to fall 2.5%. However, better news was on the horizon as inflation fears cooled and interest rates fell back nearly to where they began the quarter.
Price Action
The Federal Reserve continues to be one of the biggest movers of the market. The quarter began with expectations for the first rate cut in July and three rate cuts for the year. After hotter than expected inflation figures in April, the market ended the quarter expecting the first rate cut in September and only two rate cuts in 2024. July will mark 23 consecutive months with the Fed Funds rate at its 5.25% - 5.50% target.
Large technology companies continued to lead domestic markets higher. Nvidia finished the quarter up 37% and Apple notched 23%, both incredible numbers for such large companies.
Nvidia, briefly became the most valuable company in the world as the artificial intelligence craze continues. Nvidia has recently been the most traded company in the world averaging $50 billion in daily turnover, roughly 5 times greater than the next most active companies.
The Technology and Communication sectors were the clear winners in the quarter, up 11% and 9% respectively. Of the 11 market sectors, 7 finished in the red with Basic Materials falling 6%, as the worst performing sector.
Bond duration was again an underperformer with long-dated treasuries dropping 3% for the quarter while short-term corporates and cash gained 1%.
Commodity funds were flat with copper (+8.5%) and gold (+4.5%) offset by a decline in oil (-1.3%).
Owners of Cryptocurrency saw a large pullback, with Bitcoin falling 12% and Ethereum dropping 5.7%.
Housing prices saw a sharp rebound, gaining 3.1% for the last 3 months we have data.
Looking Forward
For the rest of the year, corporate earnings will be in focus. They were generally positive last quarter, but Q3 has been a bit more mixed as we’re just getting underway. The S&P 500 has a current forward p/e of 21, which is 1.3 standard deviations higher than its 30-year average. However, if you look under the hood, valuations aren’t as high across the board. The 10 largest companies have a forward p/e of 30.3, but that figure for the remaining 490 stocks is only 17.6.
The largest 10 stocks make up 37% of the S&P 500. That’s the highest it has been since the mid 1960s, and double what it was 10 years ago. It’s possible these large companies will continue to perform, but don’t be surprised if we see other parts of the market lead the way in the future.
Things seem relatively quiet on the global scale though there are talks of Israel making a move on Hezbollah in the near future. Were that to happen, look for markets to hope it doesn’t spiral into a larger conflict.
The election in November looks to be more interesting than most with the uncertainty around the top of the Democratic ticket and the personalities involved in the contest. Back by popular demand is the betting odds chart below:
Rialto Wealth Management is a fee-only, fiduciary, advisory firm based in Syracuse, NY. From financial planning to investment management, we help families across New York and beyond. We can be reached by phone at (315) 992-9129 or via email through our website’s secure and confidential contact page.
Q2 2024 Market Commentary
September 12, 2024 by Ethan Gilbert
Markets began the second quarter with a reprieve from the 18-month tear they had been on. By the third week in April, global equities were down 5% from where they began the quarter. However, their fortunes reversed as they rallied 7.5% over the ensuing 10 weeks to finish the quarter up 2.5%.
Bonds had a similar start to the quarter as stocks, with hotter than expected inflation causing interest rates to rise 0.50% and bond prices to fall 2.5%. However, better news was on the horizon as inflation fears cooled and interest rates fell back nearly to where they began the quarter.
Price Action
The Federal Reserve continues to be one of the biggest movers of the market. The quarter began with expectations for the first rate cut in July and three rate cuts for the year. After hotter than expected inflation figures in April, the market ended the quarter expecting the first rate cut in September and only two rate cuts in 2024. July will mark 23 consecutive months with the Fed Funds rate at its 5.25% - 5.50% target.
Large technology companies continued to lead domestic markets higher. Nvidia finished the quarter up 37% and Apple notched 23%, both incredible numbers for such large companies.
Nvidia, briefly became the most valuable company in the world as the artificial intelligence craze continues. Nvidia has recently been the most traded company in the world averaging $50 billion in daily turnover, roughly 5 times greater than the next most active companies.
Looking Forward
For the rest of the year, corporate earnings will be in focus. They were generally positive last quarter, but Q3 has been a bit more mixed as we’re just getting underway. The S&P 500 has a current forward p/e of 21, which is 1.3 standard deviations higher than its 30-year average. However, if you look under the hood, valuations aren’t as high across the board. The 10 largest companies have a forward p/e of 30.3, but that figure for the remaining 490 stocks is only 17.6.
The largest 10 stocks make up 37% of the S&P 500. That’s the highest it has been since the mid 1960s, and double what it was 10 years ago. It’s possible these large companies will continue to perform, but don’t be surprised if we see other parts of the market lead the way in the future.
Things seem relatively quiet on the global scale though there are talks of Israel making a move on Hezbollah in the near future. Were that to happen, look for markets to hope it doesn’t spiral into a larger conflict.
The election in November looks to be more interesting than most with the uncertainty around the top of the Democratic ticket and the personalities involved in the contest. Back by popular demand is the betting odds chart below:
Rialto Wealth Management is a fee-only, fiduciary, advisory firm based in Syracuse, NY. From financial planning to investment management, we help families across New York and beyond. We can be reached by phone at (315) 992-9129 or via email through our website’s secure and confidential contact page.