2024 Mid-Year Market Update

As the warm days of summer approach, we can hardly believe how quickly this year is flying by, and what a start to the year it has been with markets having continued their upward trajectory.

As noted in our January commentary, regarding the strong performance of the “Magnificent 7” seen in 2023, “historically, when you have such a divergence in return between only a few stocks and the rest of the market, this has been a positive opportunity for the ‘other’ stocks in the following year or two. We think that’s likely the case headed into 2024...” This is certainly beginning to play out; even though Tech and Communication Services continue to lead, we are seeing areas like Industrials, Utilities, & Financials contribute meaningfully to US market performance this year.

In April, we saw markets reset largely because of hotter than expected inflation and Fed rate cuts being pushed out. We are of the belief that inflation will inevitably come down but the trajectory towards the Fed’s target of 2% was never going to be a straight line. We think that while the bar for any additional interest rate hikes is higher (a lot higher) we also don’t see the need for the Fed to rush to cut rates. For that reason, we think it is likely the Fed entertains a small cut later this year (if any at all) and believe the market adjusted for this in April.

From here, company earnings will continue to drive any movement higher in markets. So far, earnings remain strong, and margins have remained healthy since dipping in 2022. We think this will likely continue and are therefore positive on growth for the remainder of this year.

For more on what has happened to the US Economy post-COVID, please check out the timely article written by Eugenio J. Alemá, PHD, Chief Economist for Raymond James in the recent Investment Strategy Quarterly.

The opinions expressed are those of Christopher Vidler and Eric Van Der Hyde as of the date stated and are subject to change. There is no guarantee that the forecasts made will come to pass. This material does not constitute investment advice and is not intended as an endorsement of any specific investment or security. Information and opinions are derived from proprietary and non-proprietary sources. Options are not necessarily those of Raymond James.

Please remember that all investments carry some level of risk, including the potential loss of principal invested. Diversification and strategic asset allocation do not assure profit or protect against loss.