2024 Mid Year Updates

The stock market is having ALL the fun!

• NVDA accounted for over 40% of the 2Q return of the S&P 500 and nearly 1/3 YTD.
• “Mag 7” stocks have accounted for nearly 2/3 of YTD gains.
• 52% of the cap-weighted S&P 500 index are from the 3 Tech-centric sectors of Technology, Communication Services, and Consumer Discretionary vs. 27.6% for the equal-weight index.
• The Technology sector accounts for ~ 32.5% weighting in the S&P 500, the highest weighting since the dot com bubble.
• Semiconductors & the Semiconductor Equipment industry is at its highest weighting.
• Several defensive areas are at/near their lowest weightings in the S&P 500 including Utilities, Consumer Staples, and Real Estate.

The economy is still chugging along, meanwhile the FED has maintained borrowing costs near their top levels for the past 20 years.

• Unemployment has remained below 4%. This is better than expected.
• The U.S. Economy has continued to grow moderately at around 2%, which is ok. The same is expected for 2025. This is better than expected.
• Housing is still sluggish for new and especially existing home sales. This is to be expected with elevated mortgage rates.
• Retail sales, including auto sales, have also been sluggish.
• Inflation has moderated to around 3%, but the damage to the consumer has already been done, due to the past few years of high inflation. The FED is on hold.

The bond market is still muddling along.

• The aggregate bond index total return YTD is -.38%.
• The hope is that the FED will lower rates and increase the value of bonds starting at the end of 2024.
• That hope began around 18 months ago and has not come to fruition with sticky inflation.

The election and year-end finish.

• The market is always looking ahead 6 months, so the election outcomes are being factored in today.
• The economy and markets have been able to perform just as well under all political scenarios…red, blue, purple (split congress).
• The FED lowering rates is very meaningful to the economy. The last 7 Presidential elections, a move was made after the election.
• The sunset of the 2017 (Tax Cuts and Jobs Act) provisions is January 2026. This is set to raise tax revenues for individuals and corporations and reduce the Estate Tax Credit back to roughly half of the current $13.5 million per person. Congress must vote to extend the tax law. Currently, the only feasible tax extension would be for Congress to be majority controlled by the Republicans.
• It is an excellent time to discuss tax strategies, while we have lower rates for 2024 and 2025. Consider actions to create tax liabilities while brackets are lower and deductions are higher!!!

Written by: Michael A. Rodenbaugh

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. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Michael A. Rodenbaugh and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. 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. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. 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.