Wealth Capital Markets Review Q3 2024

Every quarter, our Asset Management & Trust team delivers a Capital Markets Review to help keep you apprised of the latest economic news and trends. You can find key highlights from our Q3 2024 report, as well as the full report below.
Inflation has progressed toward the Fed’s two percent objective but remains somewhat elevated. The annual inflation rate for the United States was 2.5% for the 12 months ending in August, compared to the previous rate of 3.7%, according to the U.S. Labor Department. As a result of this progress, at the September 2024 Federal Open Market Committee (FOMC) meeting, the Federal Reserve (Fed) lowered interest rates by 50 basis points, easing monetary policy for the first time in four years due to progress on the Fed's dual mandate.
Report highlights:
- ECONOMY: During the third quarter of 2024, returns for large-cap stocks, as measured by the S&P 500, returned 5.8%, the S&P MidCap 400 returned 6.9%, and small capitalizations stocks, as measured by the Russell 2000 Index, returned 9.2%. A major factor contributing to the third quarter 2024 returns was the broadening of the stock market, with more than 60% of the S&P 500 components outperforming the index for the quarter, compared to around 25% in the first half of the year.
- EQUITY MARKETS: Markets are beginning to reevaluate that forecast at present. Looking back to 1995, it would appear the Fed is attempting to repeat that specific year’s intervention, which avoided a recession. Threading the needle on a “soft landing” is a tricky proposition at best, balancing the risk of higher inflation without completely throttling the economy. So far, they have achieved their mandate. We have seen “transitory” inflation jump from 2% to over 9.1% and then reverse back down to 2.5% in the span of about twenty months.
- FIXED INCOME: As the second quarter began, euphoria over the potential promises of artificial intelligence pushed certain technology stocks to record valuations. Unfortunately for bond investors, the eye-catching returns remained limited to equities. After a rough start in April, bonds rallied back to finish out May and June with positive returns.
- ASSET ALLOCATION: Our portfolios remain broadly diversified with exposure to large and smaller companies, value and growth issues, and domestic and international equities. With respect to our fixed income allocation, during the quarter, we lengthened the maturity profile inside our model portfolios. This action was the result of a slowing labor market, year-over-year inflation nearing the Federal Reserve's 2% target, and recent comments from the Federal Reserve. We reduced holdings in funds with short-term instruments and redeployed the proceeds into funds with slightly longer maturities.
This review is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the review. The review is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.
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