November was an eventful month for investors as the S&P 500 moved higher, finishing the month up almost 6%, and is now up roughly 26.5% for the year. (YCharts) The biggest market mover was the US election, while we also had a busy month of positive corporate earnings, and a Fed rate decision (0.25% rate cut).

Post election, we made adjustments to portfolios to try to take advantage of areas that we feel may have sustained tailwinds given the likely policies from a Trump administration and Republican Congress.  Below we’ve highlighted a few areas of the market we like moving forward.

November was an eventful month for investors as the S&P 500 moved higher, finishing the month up almost 6%, and is now up roughly 26.5% for the year. (YCharts) The biggest market mover was the US election, while we also had a busy month of positive corporate earnings, and a Fed rate decision (0.25% rate cut).

Post election, we made adjustments to portfolios to try to take advantage of areas that we feel may have sustained tailwinds given the likely policies from a Trump administration and Republican Congress.  Below we’ve highlighted a few areas of the market we like moving forward.

October was a steady month for investors as the S&P 500 drifted slightly higher throughout the month before pulling back to close about 1% lower.  Stocks ended the month with the S&P 500 up almost 20% for the year. (YCharts)

The 10-year Treasury yield also rallied during the month, jumping from 3.81% to 4.29%, as interest rates moved steadily higher for the first time since the end of April. (YCharts) This move is notable as it comes after the Fed cut rates in September which leads us to ask:  why did rates move higher, and what does that mean for the future?

September looked a lot like August as stocks pulled back at the beginning of the month on fears of a slowing economy, before rallying as the major indices hit new all-time highs.  The S&P 500 enters the fourth quarter up over 20% for the year.  (YCharts)

Investors had been eagerly anticipating September’s Fed meeting as most expected the Fed to begin cutting rates.  The Fed didn’t disappoint, as they cut the Fed Funds rate by 50bps.  By choosing a larger cut (50bp vs. 25bp) the Fed demonstrated that they intend to take a strong stand as they shift their focus from fighting inflation to supporting the labor market and economy.   

As we move toward the end of the year here are a few areas that are important to keep an eye on:  

Last month was a choppy one as stocks sold off sharply at the beginning of the month amidst increasing concerns of a weaker labor market, slowing economic growth, and the potential unwinding of the yen carry trade.  This pullback didn’t last long as we got some better economic data, and an update from the Fed, as the S&P 500 rallied to close the month about 2% higher. (YCharts)

We felt that the pullback was likely indicative of normal market volatility, and not the sign of an imminent recession.  During times such as these it’s important to avoid making decisions based on emotion.  One of the ways we seek to make volatility manageable is by making sure your asset allocation is in line with your goals, time horizon, and risk tolerance. 

The rally toward the end of the month was capped off by Fed Chair Powell’s speech at the Fed’s Jackson Hole symposium.  Below, we’ve highlighted three observations from that meeting:

We started the second half of the year with a little market volatility as investors digested a number of significant headlines in July.  The S&P 500 rallied strongly in the first half of the month before pulling back, but still closed about 1% higher for the month, and is now up almost 16% for the year. (YCharts)

We believe that the volatility we’re seeing in markets is a normal, and healthy, characteristic of a bull market and aren’t making any major changes to portfolios at this time given our base case that the economy avoids a meaningful recession, corporate earnings remain resilient, and stocks move moderately higher.  Of course, our active approach means that as economic data evolves, we’ll be ready to make adjustments to our portfolio positioning.

This month we’re going to highlight three data points that reinforce our outlook that an imminent recession is unlikely.

Another positive month of returns for stocks in June brought the first half of the year to a close with the S&P 500 up roughly 3.5% for the month and a very strong 14.5% year to date. (YCharts)

Throughout the year we’ve had portfolios positioned for growth and continue to believe that we’ll likely see stocks move higher over the next 9-12 months.  Of course, if our outlook changes, we’ll be ready to make adjustments.

Given that we’re at the half way point of the year we’re going to review the key areas we highlighted in our annual outlook, and what we’re watching from each of these for the back half of the year.

April was a more challenging month for investors as stock market volatility emerged following a very strong first quarter.  The S&P 500 closed the month down about 4%, after a pullback of roughly 5.5%; however, the index remains firmly in positive territory for the year.  There were a number of potential catalysts for the April pullback including increased geo-political tensions in the Middle East, hotter than expected inflation, and a shift in the expected start date of Fed rate cuts.

During periods such as this we are always trying to determine whether the volatility we’re experiencing is a typical, and healthy part of a bull market, or whether it’s the sign of something more significant to come. 

One of the resources that we rely on to guide us is our economic dashboard.  Currently, we believe that our dashboard is telling us that we’re seeing normal market volatility and that the chances of an imminent recession and prolonged market downturn are low.  Today, we’re going to highlight a couple of factors that support this:

March was yet another strong month for stocks, with the S&P 500 rallying roughly 3%, bringing first quarter returns to about 10%.  This robust start to the year comes on the heels of a great close to 2023.  In fact, when we look at the last 6 months the S&P 500 has gained over 20%. (YCharts)

While it’s important to participate in periods of stock market strength we’re always on the lookout for signs of economic and market weakness.  Currently, we are positioned for growth as we believe there are few signs of an imminent recession. 

One of the most important influences on the outlook for both the economy and stock market this year is Federal Reserve policy.  The intense focus on the Fed comes as a result of shifting policy (from restrictive to accommodative), and investors’ desire to know when the expected shift will become reality.

The March Fed meeting was an interesting and important one as it provided some updated clarity on this topic.  Today, we’re going to highlight the biggest takeaways from that meeting:

February was another great month for stocks, as markets once again hit new all-time highs.  The S&P 500 finished February up about 5.2%, bringing the year to date returns for the index to almost 7% - a very strong start to the year.  (YCharts)

Last month we pointed out a couple areas we’d be watching closely and sure enough these were big news makers for markets in February as we got some surprises from economic data, while strong corporate earnings helped drive positive returns. 

Today, we’re going to give a quick update on three important (and connected) areas that have evolved over the course of the month: