September 2024 Market Commentary & Outlook

A very strong third quarter came to a close in the wake of the Federal Reserve (Fed) lowering interest rates for the first time in over four years. The Fed cut the federal funds rate by half a percentage point, citing confidence that inflation was heading sustainably toward its 2% target. A slowing labor market along with cooling inflation reaffirmed the Fed’s policy decision and set the table for further rate cuts later this year and into 2025. Fixed income had a strong month and quarter as yields continued to decline both domestically and globally; central banks in Europe continued to ease rates as well.

On the equity side, stocks posted big gains in the third quarter with international stocks outpacing their US counterparts. Emerging markets surged due in part to a new stimulus package being rolled out in China. Easing interest rates from the European Central Bank and other central banks helped international stocks climb higher despite heightened turmoil in the Middle East and Ukraine.

In the US, economic data showed a strong, but cooling economy with better-than-expected GDP growth, improving inflation, and slowing job growth.  Over the quarter, value stocks outperformed growth, and small caps outperformed large caps, aided by the prospect of further rate cuts and lower borrowing costs.

As we move into the final quarter of 2024, there’s plenty on the docket that investors will be monitoring. Corporate earnings reports, economic data on inflation and the labor market, and more Fed policy decisions will drive market performance as well as a broadening conflict in the Middle East. The Presidential Election, now just around the corner, will likely add additional volatility as we near the end of an otherwise impressive year across the markets.