Quarterly Market Review: July-September 2024

Wall Street got off to a good start to begin the third quarter of 2024 and continued to rally for much of the quarter. Investors spent the quarter watching inflation and economic data, trying to gauge whether the Federal Reserve might lower interest rates. Each month of the quarter provided solid evidence that inflationary pressures had been curbed. Both the personal consumption expenditures (PCE) price index and the Consumer Price Index (CPI) declined over the last three months, with the 12-month rate for the CPI ending the quarter at 2.5%, and the PCE price index closing the quarter at 2.2%. In response, the Federal Reserve cut the federal funds target rate range by 50.0 basis points, marking the first rate reduction since March 2020 in the midst of the COVDI-19 pandemic. Several indexes reached new records throughout the quarter. The S&P 500 is off to its best nine-month start since 1997, while the Dow and the NASDAQ also hit new highs in the third quarter. Among the market sectors, only energy failed to close the quarter higher. The remaining 10 sectors recorded notable gains, led by utilities (19.1%), real estate (17.1%), industrials (12.6%), and materials (11.1%). Rising bond prices weighed on yields, with the yield on 10-year Treasuries closing lower in each month of the quarter. The yield on the 2-year note ended the quarter at 3.65%, a decrease of 84.0 basis points from the beginning of the quarter. Corporate earnings enjoyed a solid quarter, with 80.0% of S&P 500 companies reporting actual earnings per share (EPS) above the five-year average of 77.0%. The S&P 500 further reported growth in earnings of 11.3%, marking the highest year-over-year growth since the fourth quarter of 2021.