Market Commentary - November 2024

October is known for market volatility historically, with some of the biggest declines. This October was no exception and maintained its lore but paled in comparison to historical volatility events. Combined with the pending presidential election, when market volatility typically rises 25-50 days prior, an increase if volatility was to be expected at some point.

Global markets dipped in October ahead of the US presidential election, as investors weighed risks, despite hitting All-Time Highs during the month. Small-cap Russell 2000 and the Dow Jones Industrials fared the worst, sliding 1.5% and 1.3% respectively, though the Dow set seven record highs during the month and 40 for the year. The Russell 2000 closed October up 8.4% for the year, while the Dow finished up 10.8%. Leading indexes like the tech-heavy Nasdaq and benchmark S&P 500 slipped 0.5% and 1% respectively for the month but still closed with strong gains of 20.5% and 19.6% YTD. The mid-cap S&P 400 fell 0.8% to close October up 11.4% YTD.

The trailing 12-months for the major US stock indexes are even more impressive across the board, from the Dow’s 26.4% gain to Nasdaq’s 40.8% gain, though past performance is no guarantee for future results.

Overseas, developed market stocks fared markedly worse in October, with the benchmark MSCI EAFE index losing 5.5% and Emerging Markets sliding 4.4%; however, a stronger US dollar contributed to the losses. In local currency, the MSCI EAFE fell a more modest 1.7%  and Emerging Markets lost 2.8%

Q3 US Gross Domestic Product (GDP) grew at a solid 2.8% annualized pace, but less than expectations of 3.1%, and leads all developed nations globally; Consumer Sentiment soared 11% in October for its biggest monthly gain since March 2021 and further supported the soft-landing scenario.

Inflation eased in September to 2.4% for the trailing 12-months, the lowest rate since February 2021, though the +0.2% monthly change was stickier than expected, while the Fed’s PCE inflation gauge fell to 2.1% for the trailing 12-months and near its 2.0% target, giving the Fed validation for an expected 0.25% rate cut at its November FOMC meeting.

Interest rates jumped in October, fresh off the Fed’s 0.50% rate cut in September, with the benchmark 10-year Treasury Note yield rising 0.47% to 4.28%. The benchmark Bloomberg Aggregate Bond Index fell 2.6% in October and finished +1.9% for the year.  For the trailing 12-months, the benchmark is up 10.6%.

This entire year, including right up to election day, we have urged Investors remain patient and disciplined and look beyond the election with their investment portfolios, regardless of the outcome. That guidance remains the same going forward.

November Update: Stocks Surge to All-Time Highs After Trump Election Victory

Donald Trump was elected as the 47^th President of the United States with a decisive victory, including Republicans retaking the Senate, while the House remains undecided. Stocks surged across the board to close the week at record highs.

Small-caps led the rally with the Russell 2000 rocketing 8.6% for the week, followed by the mid-cap S&P 400 jumping 6.3% to a record high. The Dow, S&P 500, and tech-heavy Nasdaq closed the week at All-Time Highs, with gains of 4.6%, 4.7%, and 5.7% respectively.

Foreign markets posted more modest gains for the week, with the benchmark MSCI EAFE index edging higher by just 0.2%, while MSCI Emerging Markets gained 1.2%.

The Fed cut policy rates another 0.25%, as expected, at its November 6-7 FOMC meeting citing continued progress of inflation towards its 2.0% target.

With the election now behind us, we continue to urge investors to remain disciplined and focused long-term with their investment portfolios as the markets continue to analyze and calibrate the results; we remain cautiously optimistic for the balance of the year and for 2025 as well.

Going forward, it is important investors:

• Remain well-diversified
• Maintain discipline and patience
• Focus on the long-term
• Review your Risk Tolerance

Call your Nelson Advisor today at 800-345-7593 to discuss any concerns and review your portfolio.

~Your Nelson Securities Team   

*Past Performance is No Guarantee for Future Results