PFA Updates

October 2024 Market Update

Oct 07, 2024

There were a lot of cheers as the markets closed on 9/30/24. The S&P 500 and DJIA closed at record highs.[1] The markets are up eight out of nine months this calendar year, with April being the only negative month in 2024. We have been telling clients that it’s one of those periods in the markets we should enjoy. In fact, it’s hard to find an index that is not positive year to date or over the last 12 months.[2] There are always some dark clouds looming on the horizon, whether they are related to geo-political events, the contentious presidential election, the recent port workers strike, or the possible government shut down looming December 20th. Invesco.com said recently, “the happiest investors this past summer may have been the ones who turned off the news to binge watch sports.” We are staying positive and hope you are too.

Our investment committee has reviewed recent economic data and internal performance reports. Our Investment Models continue to track well with their comparative benchmarks. We are happy with our current model allocations and are not contemplating any changes in the near term. We are suggesting to clients, given the very nice growth in investments this past twelve months, if you would like to increase your bank savings or are contemplating a need for a withdrawal in 2025 to fund travel, house upgrades, etc., now might be a good time to consider a withdrawal from the growth. We are happy to review your options.

Positive Comments About the Economy and Markets

Federal Reserve Chair Jerome Powell said that the economy remains strong, and the central bank is no rush to cut interest rates. Powell signaled that two more quarter point cuts to the benchmark fed funds rate are possible this year if economic data comes in as expected.[3]
The payroll data validates our bullish 6,000 S&P target as job growth over 100,000 is consistent with a growing economy. We continue to forecast normal growth of 2-3% for 2024 and 2025.[4]
The market is focusing on 2025 with growing optimism. Not only is a recession no longer expected, but stock prices are also now factoring in a potential growth surge. [5]
When the Fed cuts rates because it can, to recalibrate policy rather than because it must support the economy, this has been historically bullish for stocks. Fortunately for investors, I believe that’s exactly the scenario we may be in currently – despite recent market pullbacks fueled by fears of slowing growth.[6]

Concerns About the Economy and Markets

Though investors are broadly optimistic heading into the final stretch of the year, October has a troubling history for markets. It is known as a time of extreme volatility, with some of the most notable Wall Street drawdowns occurring over the month.[7]
All in all, I think we will weather any squalls, but we may well be in for an extended chop as we enter a seasonally more turbulent period. Stay diversified and this too shall pass.[8]
Does this mean the US is already in a recession? Not yet, but dark clouds are gathering. Investors should be wary about slower economic growth than the financial markets now assume.[9]
For a soft landing to be successful, consumers need to believe it to be true and have the confidence to increase spending. Consumer sentiment, which measures how consumers feel about their own financial situation, has been historically low for the past few years. The Current Conditions Index has recently fallen back to some of the lowest levels on record.[10]

Friends let’s keep our long-term view in focus. There will be times of negative sentiment and volatility; and times of record index gains as we are enjoying now. Historically, the S&P 500 is positive 75% of the time.[11] We think that’s a favorable winning percentage. Keep the faith friends. Let us know if we can answer any questions about your investment strategy.

Sincerely,
Your PFA Investment Committee

[1] CNBC.com

[2] franklintempletondatasources.com

[3] marketwatch.com

[4] infracapfunds.com

[5] earningsscout.com

[6] Fidelity.com

[7] CNBC.com

[8] Fidelity.com

[9] ftportfolios.com

[10] investech.com

[11] Forbes.com