On Air with Altair: 2Q 2024 Market Review Video
Want to hear Altair’s analysis of the markets, but lack the time to read all of Altair Insight? Watch our video summary of the report and get caught up on our market review in 3 minutes.
MARKET IS TOP-HEAVY
The stock market is the most concentrated it’s ever been, with a very short list of big winners this year and a long list of laggards. You’ve heard plenty about the market dominance of Nvidia and other giant tech stocks being fueled by an artificial intelligence boom. But did you know that close to 40% of the stocks in the S&P 500 are down for the year? That lopsidedness has been problematic for diversified portfolios such as ours in the short run. However, we think rate cuts will be good news for underperforming asset classes and will soon even out the market’s one-sidedness.
FED POISED TO CUT
The Federal Reserve has held interest rates steady at 5¼ percent for over a year. But now it appears set to join other global central banks in initiating rate cuts soon. Inflation is tracking close to pre-pandemic levels and the economy is cooling but remains healthy, thanks to resilient consumers and the labor market. We think the Fed will reduce rates in September, with perhaps one more cut to come in 2024. That will mark an important step forward for businesses, consumers and the economy. We believe the Fed is on track to engineer the soft landing that was once viewed as improbable.
A TURBULENT ELECTION CAMPAIGN
The presidential campaign has been full of dramatic developments, and more surprises are likely in the 100 or so days remaining until the election. We are paying close attention to the investment implications of a November victory by either party’s nominee, or of a sweep. However, it is far too early and risky to draw conclusions about a specific outcome. And it is also important to remember that economic fundamentals and corporate earnings, not politics or elections, are generally what drive the markets. Stocks have performed well during each of the last two presidencies. With a healthy economy, we expect that to continue under the next president – Republican or Democrat.
OUR OUTLOOK
A slightly cooling U.S. economy is good news for investors, signaling that the Fed’s restrictive monetary policy is paying off. Strong corporate growth and coming interest-rate cuts should provide a welcome tailwind for the economy and markets.
All investments may lose money. We do not intend for this material to match your goals or risk tolerance and our opinions may change. For more information about our business practices and identified conflicts, visit https://altairadvisers.com/disclosures/.