The third quarter is underway and commenced with fixed income having a stellar month on the expectation that the Federal Reserve (Fed) will begin cutting interest rates at their September meeting. The Fed held rates steady during the July meeting, however yields declined, and bond prices climbed through the month on data that showed inflation slowing and the economy cooling, inspiring optimism for rate cuts.
US stocks climbed over the month and markets saw a significant recent trend reversal with small cap and value stocks driving performance rather than their mega-cap counterparts. Mixed earnings reports from large tech companies, and the prospect of rate cuts stimulating broader economic growth encouraged investors as stocks ascended in July.
Internationally, stocks outpaced their US counterparts, led by strong performance from the UK stemming from better-than-expected economic growth for the second quarter. Central banks in the UK and Canada lowered interest rates and election results in France calmed markets. Emerging markets ticked up, and international bonds matched domestic bonds in their exceptional performance.
August began with a choppy start as markets pulled back on poor earnings reports from large tech companies and worries that the economy has slowed more than anticipated. Earnings and economic data leading up to the Fed’s highly anticipated September meeting will have investors’ attention as we progress into the third quarter, along with continual election-related developments.
| Index Performance | July | Year to Date | Trailing 12 Months |
| US Stocks (Russell 3000) | 1.86% | 15.67% | 21.07% |
| International Stocks (FTSE AW ex US) | 2.58% | 8.46% | 10.52% |
| US Bond Mkt. (BBgBarc Int. Gov/Cred) | 1.88% | 2.37% | 5.87% |
| Cash (ICE BofA ML 3-Mo T-Bill) | 0.45% | 3.09% | 5.45% |
There is no guarantee that any investment strategy, including those described here, will be successful. Any investment or investment strategy can lose money. Past performance does not guarantee or predict future results. You should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Raffa Investment Advisers, LLC. This information was gathered from reliable sources but we cannot guarantee accuracy. Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated. Source: Morningstar, Inc.