Quarterly Market Commentary
Q3 2024 Market Commentary
The third quarter of 2024 saw positive returns from both stocks (S&P 500 up 5.6%) and bonds (Bloomberg U.S. Agg Bond Index up 5.8%), albeit not without volatility.
The economic and market backdrop heading into the second half of 2024 looked strong but with reasons to be cautious as we started the third quarter. Economists and the Fed were divided on the state of the economy as inflation, while down significantly from the highs of just a few quarters prior, remained stubbornly above the Fed’s target. At the same time, unemployment, while still at historically low levels, showed early signs of weakening. Despite the mixed economic narrative developing, the S&P 500 made new all-time highs on the back of optimism surrounding AI and companies directly supporting or supported by this new technological evolution. The AI momentum carried forward for about two weeks until a surprise inflation report showed more significant progress towards the Fed’s target. This prompted more calls for a rate cut in September and potentially multiple rate cuts before the end of the year. The market responded by reversing leadership with small caps and cyclicals, which tend to be more sensitive to interest rate changes, posting a huge rally while the mega cap tech stocks that had been dominating began to falter as investors took profits and grew concerned with valuations of this corner of the market.
Equity markets took another turn lower when a confluence of events occurred that drove more uncertainty and fears. The Bank of Japan unexpectedly announced an interest rate hike, which caused a major sell off in Japan and a ripple effect across global markets. Concurrently, the U.S. posted a weaker-than-expected jobs report in August, leading many to say the Fed waited too long to cut interest rates and a recession is imminent. If that wasn’t enough, many big tech companies underdelivered on earnings and outlooks. While those headlines were alarming, our view was the market sell-off was based more on technical factors than outright economic weakness and would stabilize. The market continued to be choppy as more focus moved towards the September Fed meeting and the question became not if they would cut rates, but by how much. The Fed delivered a half percentage point rate cut and paved the path for further rate cuts for the remainder of the year. The market broadly rallied in the latter half of September and finished the quarter once again making new all-time highs.
Insurance products issued by Principal National Life Insurance Company (except in NY), Principal Life Insurance Company®, and the companies available through the Preferred Product Network, Inc. Securities and advisory products offered through Principal Securities, Inc. member SIPC. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392. Richard C. Orvis, and Wes Wadkins III, Principal National and Principal Life Financial Representatives, Principal Securities Registered Representatives, Financial Advisors, and members of the Principal® Financial Network. Orvis & Wadkins Financial Advisors, LLC and Horizon Investments are not affiliates of any company of the Principal Financial Group. 2611855-122022
The commentary in this report is not a complete analysis of every material fact in respect to any company, industry, or security. The opinions expressed here are not investment recommendations, but rather opinions that reflect the judgment of Horizon as of the date of the report and are subject to change without notice. Forward-looking statements cannot be guaranteed. We do not intend and will not endeavor to provide notice if or when our opinions or actions change. This document does not constitute an offer to sell or a solicitation of an offer to buy any security or product and may not be relied upon in connection with the purchase or sale of any security or device.
Equity markets are represented by the S&P 500 Index. The S&P 500 is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The Bloomberg U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, mortgage-backed securities, asset-backed securities and collateralized mortgage-backed securities. References to indices, or other measures of relative market performance over a specified period of time are provided for informational purposes only. Reference to an index does not imply that any account will achieve returns, volatility, or other results similar to that index. The composition of an index may not reflect the manner in which a portfolio is constructed in relation to expected or achieved returns, portfolio guidelines, restrictions, sectors, correlations, concentrations, volatility or tracking error targets, all of which are subject to change. Indices are unmanaged and do not have fees or expense charges, both of which would lower returns. It is not possible to invest directly in an unmanaged index.
This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such.
Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC.
© 2024 Horizon Investments
Q2 2023 Quarterly Commentary Piece
Q3 2023 Quarterly Commentary Piece
Q4 2023 Quarterly Commentary Piece
Q1 2024 Quarterly Commentart Piece
Q2 2024 Quarterly Commentary Piece
This commentary is based on public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such.
Horizon Investments and the Horizon H are registered trademarks of Horizon Investments, LLC.
© 2024 Horizon Investments
Horizon Investments, LLC and Ford & Associates Wealth Management are not affiliates of any company of the Principal Financial Group®. Securities and advisory products offered through Principal Securities, Inc., Member SIPC, Des Moines, IA 50392.
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