Second Half of 2024
The first month of the second half of 2024 has been a turbulent one, which was not unexpected. The markets finished the first half mostly positive, but with most of the gains coming from the mega cap tech companies. “AI” continued to be a favorite area for investors but has cooled quite dramatically the past six weeks. Small cap and value stocks have outperformed over the past month as the market has broadened out at the expense of large cap growth stocks. We would not be surprised to see this continue as we expect rates to move lower.
The economy has slowed, and inflation has fallen, which has helped fuel the rally in both stocks and bonds. We think the markets may struggle and be volatile in the third quarter with the uncertainty of whether the slowing economy leads to an eventual recession. Add in the upcoming election, geopolitical concerns and earnings uncertainty, we are cautious. We continue to favor short term fixed income, dividend paying stocks, structured investments and growth stocks on market weakness should it materialize.
We were cautious going into the year on stocks in our previous Ken’s Korner and while the S&P 500 is up double digits, the equal weighted S&P 500 is only up about a third of those gains. At one point in June, Nvidia alone was responsible for over 30% of the entire S&P 500’s gain. This narrow participation is another reason for our short-term caution.
Despite our caution, we remain bullish long term and look to the future with optimism and excitement, brought on by unbelievable innovation throughout numerous industries.
Best Regards,
Kenneth M. Lampos
Senior Vice President, Investments
Wealth Management Specialist
Any opinions are those of Kenneth M. Lampos and not necessarily those of Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the forgoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance is not indicative of future results. Diversification and asset allocation does not ensure a profit or protect against loss. Holding investments for the long term does not ensure a profitable outcome. Dividends are not guaranteed and must be authorized by the company’s board of directors. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The S&P 500 Equal Weight Index is the equal-weight version of the widely-used S&P 500. The index includes the same constituents as the capitalization weighted S&P 500, but each company in the S&P 500 EWI is allocated a fixed weight - or 0.2% of the index total at each quarterly rebalance. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary.
