Market Insight

August Market Insight

In our previous insights, we highlighted a number of positive factors favorably influencing investor behavior. Despite no recent action being taken, the Fed is transitioning away from restrictive monetary policy on a trajectory that will lead to lower rates well into 2025. Though the economy shows some modest signs of slowing, job creation remains healthy, and consumers have not yet curtailed their spending habits. Halfway through 2024, corporate earnings have surpassed expectations and are projected to set record highs this year and next.

Although overall conditions are positive, investors have not favored all sectors or industries equally. Similar to the pattern observed in 2023, investors continue to heavily favor growth-oriented companies within the information technology and communication services sectors. Although eight of the other nine industries have shown positive returns this year, their average returns of just over 6% pale in comparison to the remarkable 18% returns shown by both the information technology and communication sectors. Our Investment Committee remains focused on managing well-diversified equity portfolios for longer market cycles. However, our committee made timely adjustments to our equity exposure in early 2024 by increasing our allocation to domestic growth companies.

This cyclical and sustainable bull market which began in 2009 is now over 15 years in duration. While that may seem like a long time, it still ranks in the lowest quartile of historic bull market runs. There is no question significant gains have been made over the last 15 years (particularly in the last 5 years), but we do not foresee the positive long-term momentum fading anytime soon. With the exception of 2022, stocks have generally delivered strong annual returns, resulting in significant growth for well-diversified portfolios.