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As we move into the second half of 2024, the US economic engine is chugging along.

Strong growth in employment and wages has boosted disposable income for workers. Household net worth continues to climb, pushed up by stock market and house price gains. And consumers appear poised to enjoy summer with a sunny, ready-to-spend mood.

According to JP Morgan chief strategist David Kelly: “consumer spending will likely keep growing, although more slowly, in the months and quarters ahead, suggesting that it would take a significant shock elsewhere to tip the US economy into a recession.”

With sunny skies and no recession in sight, the investment environment for stocks has been hot.

The S&P 500 index of large company US stocks returned 15% in the first half of the year, and strong performance by a handful of big tech companies contributed about two-thirds of the index’s return.

So far in 2024, the S&P 500 Index has made a record high 33 times. The Nasdaq 100 index, which has a large weighting to technology stocks, has made a record high 23 times.

Foreign stock market returns have been less ebullient but still positive. The MSCI’s Europe, Australasia, and the Far East (EAFE) Index has gained 5.8% year-to-date through the end of June.

Here’s a chart from Bloomberg that puts the current stock market rally into historical perspective.

The S&P 500 has posted an 85% advance since 2019 (red line), even despite some challenging stretches, like “Pandemic” 2020 and “Inflation Scare” 2022.

Compare this to the 238% rally during the last five years of the Roaring Twenties (black line) in the previous century, and the 220% climb of the 1990s Internet Bubble (green line).

When viewed from an historical perspective, the current bull market appears to be more run-of-the-mill than exceptional, and less likely to be cited as an example of irrational exuberance that led to an inevitable bursting of a bubble.

The bond market has been a far chillier place to invest so far this year. Short-term bond returns have been in the range of 1-3%.

However, doubts and worries persist about the direction of intermediate-term interest rates. Most recently, market participants are raising concerns about the Federal government’s budget deficit, inflation, and the outcome of the 2024 Presidential election.

Intermediate term investment grade bond yields have risen year-to-date, which means returns for many bonds with maturities beyond three years have been negative so far in 2024. If current bond market trends persist, intermediate-term bonds could post another down year, which would mean losses in three of the last four years.

Here’s a snapshot of stock and bond performance for the last six quarters:

US Stocks = S&P 500 Index; US Bonds = Bloomberg US Aggregate Bond Index