As we head into the last three months of 2024, the US Presidential election is a major source of uncertainty, and elevated geopolitical tensions are a cause for serious concern.
However, the rally in stock prices continued in the third quarter, and bonds showed a measure of resiliency, too.
A main mover of financial asset prices has been the anticipation of short-term interest rate reductions by the US Federal Reserve. In mid-September the Fed took action and lowered its target rate by 0.5% to a range of 4.75% to 5%.
The US economy, which has exhibited better-than-expected growth, has underpinned the stock rally. And bonds have done better because inflation has come to heel.
For the month of September, US large-company stocks rose by 2.1%; small-company stocks gained 1.9%, foreign stocks climbed by 0.8%, and bonds returned 1.3%.
The moves were more pronounced for the three-month period ending September 30: US large-company stocks rose by 5.8%; small-company stocks gained 9.1%, foreign stocks climbed by 6.8%, and bonds returned 5.3%.
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
-RK