Quarterly Market Update 6.30.2024
Hi, it’s Scott Campbell your 401(k) advisor with my quarterly market update for the second quarter 2024.
Performance in U.S. stock markets in the second quarter was driven by the same small handful of stocks that have been driving performance in U.S. stock markets for the past 18 months. Referred to as the Mag Seven.
The U.S. stock market was up 3.48% in the second quarter. The intermediate term bond market was flat.
The economy is doing well, although there are signs it is slowing. The much anticipated and discussed slowdown is finally appearing. However, the summer is historically a slower time for the economy. So the cause is not yet known. For now it appears to be a mild slowdown.
Inflation is ebbing slightly, but prices remain high. I grocery shop and have to say, prices for certain things are much higher than a couple years ago. The cost of a lot household expenses are significantly higher.
Employment is strong, however a lot of the jobs that have been added are lower paid part time jobs. But, as long as everyone is working they can afford the higher prices.
This year is an election year. National elections tend to be volatile leading up to the election due to the uncertainty. After the election, when certainty returns, markets do well.
Generally, the U.S. economy and markets appear to be sort of returning to historical cycles. In that the economy, historically slows in the summer, which leads to volatile stock markets in the summer and especially in the fall when the results of a slower summer economy are reported. Stock markets have recovered nicely from 2022. So, pullbacks due to volatility should be expected. We are still waiting for bond yields to settle so bond fund performance will improve. Right now short and very short term bonds are performing very well.
If you have been reading my commentary over the years, you will recall one of my issues, which I am way overdue repeating: is U.S. government debt. The U.S. has way too much debt. The debt level is at a level that years ago was unimaginable.
This is a bipartisan problem. Both parties have, for years, spent money like drunken sailors, with no regard for the future.
The problem is at hand. For years interest rates were near zero percent. Now interest rates are much higher. The interest that the U.S. Treasury must pay on the debt is going to be the largest expense of the federal government. That means the federal government won’t have money to spend on all the things they spend now. Which is ultimately a very good thing. But, this is a serious issue for the next generation because the government will be so saddled with debt it will be financially unable to provide services to the public. Anyone remember Greece going bankrupt and austerity? Yeah, they didn’t think it could happen either. Please search it.
The Federal government must control its spending. Just like most households in the U.S. which are not able to spend endlessly without regard to debt. The time has come for citizens to speak out about this incredibly irresponsible behavior.
If you have any questions about your 401(k) or need help, please reach out.
