The economy is in uncharted territory. The Leading Economic Index (LEI), which tracks ten data points that tend to change before the overall economy does. Economists monitor the LEI because it includes data that can provide insight into future economic activity, such as unemployment claims, building permits, and manufacturing hours worked. A rising LEI signals improving economic conditions, while a declining LEI suggests worsening conditions.

Stocks ended the week slightly higher, driven by Large Cap Growth, while Equal-Weight, Value, and Small Caps lagged. Bonds traded lower as yields rose, with longer-duration bonds underperforming. Market sentiment remains volatile, with investors shifting between mega-cap growth stocks and this year's weaker performers..

In the third quarter of 2024, the Federal Reserve made its first interest rate cut of the cycle, reducing rates by 0.50%. This move was driven by rising unemployment, reaching a 33-month high, and inflation returning to target levels. Despite market volatility, including a sharp sell-off in August, equities finished the quarter higher. The S&P 500 achieved its fourth consecutive quarterly gain, approaching record highs by the end of September.

This week, investor confidence grew after the Federal Reserve's Federal Open Market Committee (FOMC) announced a significant 50 basis-point cut to short-term interest rates, lowering the federal funds rate to 4.75%- 5.0%. Chairman Powell hinted that the FOMC might initiate a series of rate cuts that could extend well into 2025, depending on economic conditions.

As the 2024 presidential election approaches, Americans are preparing to vote in what polls forecast to be a tight race. Like many investors, you may wonder how the election outcome could affect financial markets and whether you should change your investment strategy. While elected leaders can influence economic growth by enacting laws and regulations, data suggests that who occupies the White House has little to no impact on investment performance.

The week started off volatile, but the S&P 500 finished higher, led by the largest stocks. Large Cap Growth, High Beta, and Momentum outperformed, while the Russell 2000, Large Cap Value, and Low Volatility underperformed. One notable theme in the past few weeks has been investors pricing in slower economic growth and aggressive rate cuts

This week, the stock market experienced heightened share-price volatility. Investors are grappling with numerous uncertainties, including the direction of Federal Reserve rate policies, persistent inflation, fluctuating employment figures, corporate earnings, and the impending presidential election results.

Investors expect the Federal Reserve to start cutting interest rates at its next meeting on September 17th. Fed Chair Jerome Powell signaled the move at last month’s Jackson Hole conference by saying, “The time has come for policy to adjust."

Stocks traded higher early this week before giving back some gains on Thursday. It's been an impressive recovery in the equity market after the early-August volatility, with the S&P 500 less than -2% below its July 16th all-time high. This week’s gains were small with limited return dispersion, but there was a minor rotation underneath the surface.

This week, the S&P 500 continued to trade higher following the recent market volatility. The index has reclaimed its 50-day moving average and improved its technicals from the early August low. This week, the market returned to its 1H 2024 regime.

The stock market had a strong start this year. The S&P 500 gained over +15% in the first six months, its 16th strongest first-half return since 1931. The equity market’s rise continued into early July, and the index set a new all-time closing high on July 16th. However, the stock market experienced increased volatility as it traded lower over the past few weeks.

This week, the market experienced significant deleveraging as it saw a decline in risk appetite: defensive sectors and gold outperformed. Stock and bond volatility spiked, but the credit market showed little sign of stress. We expect residual volatility in the near term as the market seeks a new equilibrium.