In Markets "In a Nutshell"

Markets “In a Nutshell” for October 14, 2024

Investment Week at a Glance

Stocks finished higher for the week. The Dow Jones Industrial Average rose 1.2%, the S&P 500 was up 1.1%, and the NASDAQ rose 1.1%. Foreign stocks (MSCI EAFE) were down, falling 0.2%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 3.97%.  (Data source: Wall Street Journal)

Bull Market Anniversary

Last week marked 24 months since the start of the bull market we are currently in. Since October 2022, the stock market has increased roughly 60%. If we look back to two years ago, inflation was still above 8% and the S&P 500 was down 25% from its peak. Since then, the S&P 500 has gone on to make 45 new record highs. Looking at the past 11 bull markets dating back to 1957, the average start to a bull market is right in line with what we have seen this bull market, up in the 60% range. The average bull market lasts nearly 5 years with 8 of the 11 making it through 3 years. However, returns typically are not as high after the first couple of years for bull markets. One difference in this bull market is that the Fed will begin its rate-cut cycle right in the middle of a roaring bull market.

S&P 500 vs Equal Weight Performance

In the previous 7 bull markets, the equal-weight S&P 500 had outperformed the market cap-weighted S&P 500 in the first two years by an average of over 27%. In this bull market, the S&P 500 has outperformed the S&P 500 equal weight index by 16%, a 43% difference. This is starting to shift back to historical norms as in the past 3 months the equal weight has outperformed the S&P 500 by over 2%. This is one reason why the market gains broadening out has become such a widely talked-about topic. Many expect the market gains to continue to broaden out as the Fed begins its rate-cut cycle. Investors will be paying close attention to see if this trend continues or if the mega-cap tech companies take back their position as market leaders.

Quiz:

When was the S&P 500 created? (Scroll Down for Answer)

  1.     1923
  2.     1941
  3.     1957
  4.     1971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

 

 

Answer:

3.    1957. Standard & Poor created its first stock market index in 1923 which covered 233 companies. It wasn’t until 1957 that it expanded to track 500 companies and was renamed the S&P 500 Stock Composite Index.

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