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July 15, 2024

S3E25 – Q2 2024 Review and Q3 Outlook

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In this episode, we take an in-depth look at the market trends and economic indicators of Q2 2024, along with our outlook for Q3. We discuss the overall market performance, the impact of tech stocks, bond market stability, and the intriguing dynamics of the international stock market. Additionally, we explore the implications of unemployment rates, inflation, and consumer behavior on the economy.

Key Points Discussed

  • Market Overview:
    • The overall market has shown strong performance in 2024 so far.
    • The Russell All Cap Index increased by 3.2% for Q2 and 13.5% for the year.
    • The S&P 500 grew by 4.3% for the year, driven predominantly by tech stocks.
    • Large-cap growth index (tech stocks) surged by 8.3% for Q2 and over 20% for the year.
  • Tech Stocks Dominance:
    • A small subset of tech stocks significantly contributed to market gains.
    • Considerations for diversified portfolios and potential risks if these stocks lose momentum.
  • Bond Market:
    • Aggregate bond index showed slight growth (0.1%) for Q2.
    • Intermediate-term municipal bonds were the only negatively performing segment.
    • Positive yield curve trends signal a more normalized economic outlook.
  • International Stocks:
    • Developed market stocks (mainly European) slightly declined due to a strong dollar.
    • Emerging market stocks showed positive growth (5%) for Q2.
  • Economic Indicators:
    • Unemployment remains low, below 4% for 30 consecutive months, but showed a slight increase to 4.1% in June.
    • GDP continues to grow, signaling a robust economy.
    • Inflation shows signs of easing, with core goods experiencing price drops.
  • Stock Earnings:
    • The top ten S&P 500 stocks continue to deliver strong earnings.
    • Nvidia’s performance remains strong, defying expectations.
    • Consumer Behavior:
    • Some concerns over elevated credit card and auto loan delinquencies.
    • Possible depletion of extra consumer savings from COVID-19 relief programs.

Positive Market Signals

  • Low unemployment rates.
  • Continued GDP growth.
  • Easing inflation rates.
  • Strong earnings from top stocks.

Areas of Concern

  • Potential cracks in consumer spending and elevated debt levels.
  • Inflation is still above the Fed’s long-term target of 2%.

Conclusion and Outlook

While the market has shown remarkable resilience and growth in 2024, the dominance of a small number of tech stocks and potential consumer debt issues warrant cautious optimism. Inflation trends and unemployment rates will be key areas to watch as we move into Q3.

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Feedback

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