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Weekly S&P 500 Stock Market Review Recap I For the Month of May 2025 I Kip Lytel CFA, Montecito Capital Management

5/1/2025

May 9, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. After consecutive weekly gains, U.S. stocks experienced a general decline this week as investors faced uncertainty regarding Federal Reserve policies and ongoing global trade negotiations. The S&P 500 fell by 0.5% over the week, while the Dow Jones decreased by 0.2%, and the Nasdaq Composite also ended the week lower with a 0.3% drop. On Wednesday, the Federal Reserve decided to maintain its key interest rate as it awaits the development of the Trump administration's trade policies and their effects on a struggling economy. In a decision that was largely anticipated given the prevailing uncertainty in the political and economic environment, the FOMC kept its benchmark overnight borrowing rate steady at a range of 4.25%-4.5%, unchanged since December. The Fed remarked, 'Uncertainty regarding the economic outlook has further increased' and 'The Committee is mindful of the risks associated with both aspects of its dual mandate and assesses that the risks of rising unemployment and inflation have escalated.' During its previous meeting in March 2025, the Fed maintained the key benchmark lending rate at 4.25% to 4.50%, while indicating the potential for two cuts of 25 basis points before the year's end.

May 2, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. In the wake of a steep decline during the first week of April, the S&P 500 mounted a vigorous recovery, driven by news of a 90-day pause in the implementation of tariffs. By the close of the weekend on May 2, 2025, the S&P 500 had achieved a 2.9% return, marking its ninth consecutive day of gains, the longest such streak since 2004. However, the S&P 500 still finished the month down 0.7%, with 10 of the 17 factor indices we monitor underperforming relative to the U.S. benchmark. Pure Growth was the best performer among these indices, rising by 2.6%, while High Dividend lagged with a decline of 5.6%. Additionally, this week, we learned that the U.S. GDP contracted at an annualized quarterly rate of -0.3%, ending a 10-quarter period of strong economic growth. Nonetheless, this appears to be more of a temporary fluctuation than a lasting trend. A detailed review of the report indicates that a significant increase in imports, as U.S. firms anticipated tariffs, detracted five percentage points from growth.

Weekly S&P 500 Stock Market Review Recap I For the Month of April 2025 I Kip Lytel CFA, Montecito Capital Management

4/12/2025

April 25, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The three major stock market indices experienced an increase over the week, marking their second week of gains out of the last three. The S&P 500 rose by 4.6%, while the Nasdaq saw a rise of 6.7%. Although the Dow lagged behind, it still achieved a weekly gain of 2.5%. Throughout the week, market fluctuations were influenced by news regarding tariff regulations, the autonomy of the Federal Reserve, and trade discussions between the U.S. and China. The inconsistent communication surrounding trade issues has contributed to market volatility. Earnings for the S&P 500 are projected to have increased by 9.7% in the first quarter compared to the previous year, with 64% of S&P companies surpassing revenue forecasts for Q1, aligning with the 10-year average of 64%. Investors will be closely monitoring several key economic indicators set to be released next week, including quarterly GDP figures, a significant inflation report, and the employment statistics for April.

April 17, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. This week, market fluctuations persisted as investors grappled with the potential effects of tariffs. The S&P 500 experienced a decline of 1.5%, while the Dow and Nasdaq fell by 2.7% and 2.6%, respectively. In 2025, the Dow and S&P 500 have decreased by 8% and 10%, respectively, with the Nasdaq suffering a nearly 16% loss. Fed Chair Jerome Powell indicated that the tariffs imposed by the Trump administration would likely increase inflation and hinder economic growth, presenting a challenge for the central bank in determining interest rate policy. Analysts at Wedbush informed clients in a note on Thursday that they anticipate minimal guidance from technology companies over the next month due to the current uncertain environment. Additionally, tariffs have adversely affected U.S. consumer sentiment, which has fallen to its second-lowest level since records began in 1952. According to the latest survey from the University of Michigan, consumer sentiment dropped 11% this month to a preliminary reading of 50.8, marking the second-lowest figure recorded since 1952 and lower than any reading during the Great Recession.

April 11, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. It was a wild ride, but all three major U.S. indexes ended the week higher after Trump paused some Tariff actions and the Boston Federal Reserve President Susan Collins made assurances that the Fed is prepared to keep financial markets functioning should the need arise: S&P 500 +1.81%, Nasdaq +1.63% & Dow +1.56%. However, the S&P 500 and Nasdaq are still down -8.8% and -13.4% for the year, respectfully. Morgan Stanley’s base case is a soft landing characterized as “slower but steady growth and inflation” that stays relatively subdued, while Goldman Sachs lowered their odds for a recession in the year ahead to 45%, unwinding an increase to 65% earlier in the day prior.

April 4, 2025, US Tariffs Cause Stock Market Upheaval, Damaging Retirement Portfolios Across America I Potential Future Risks, Portfolio Strategies & Expectations I Special Edition Advisor Commentary

4/5/2025

S&P 500 lost $5 trillion in two days in tariff selloff, exceeding a two-day loss of $3.3 trillion in March 2020 when the pandemic ripped across global markets. The S&P 500 fell 10.5% across Thursday and Friday, the index’s worst 2-day stretch since March 2020 and its third worst since the turn of the century. Similarly, the Nasdaq plunged 11.4% and the Dow 9.3% marking their worst 2-day stretch since March 2020.

Insofar as tariffs were expected to be announced by the Trump Administration, the breadth and severity of the levies dwarfed those imposed by Trump during his first term, threatening to upend global supply chains, exacerbate an economic slowdown and boost inflation. The proposed increases, which encompass tariffs on automobiles and other previously disclosed items, are projected to elevate the average US tariff rate to over 20%, marking the highest level in more than a century. Wall Street economists pronounced the tariff outcome as worse than expected. Since the tariff hike was more severe and harsh than what most market participants anticipated, the equity market responded with sharp risk off sentiment. This reflects weaker economic expectations on a macro level as well as the individually impacted company stocks on a micro level.

Business confidence measures have fallen and those for consumers have outright plunged, impacted by uncertainty and expectations for higher inflation. The exorbitantly high tariffs will also likely alter corporate capital expenditures, employment hiring and retention, investment and obviously restrict freedom of trade. While the economic impact of these potential changes for the U.S. economy is expected to be moderate over time, market volatility is likely to remain elevated—and the situation remains fluid.

A key concern is that tariff uncertainty continues with retaliatory tariffs from the EU, UK, Asia and other regions expected to unfold in the coming days. Therefore, early Thursday we forecasted 5,300 as the near-term drop target for the S&P 500 but also stated that should tariff risks persist with trading partners we see the next downside leg to be 5,000. Should global "tit-for-tat" retaliatory tariffs escalate, then the probability of US stocks entering bear market will go higher.

In the bond market, US Treasury yields fell sharply. Investors turn to US government bonds as a safe haven, as well as on expectations of a slowdown in economic growth. The yield on the key 10-year US Treasury note fell to 4.01% from 4.20% before Trump unveiled his plans.

Since we emphasize that the understanding of risks embedded in a portfolio is central to providing value to our clients, we actively manage and build diverse, multi-asset portfolios to capture long-term positive returns while having resilient portfolios that may help weather market volatility. This risk management reflects the concepts of having strategy and asset-class diversification in place, risk management and good defensive planning.

What also sets us apart from our advisory peers is the implementation of several liquid alternative funds in portfolios, which add stability during times of negative volatility, while also offering participation in upward trending (or recovering) markets. Additionally, we have a good degree of gold, gold miners and investment grade bonds that add another layer of insulation. Finally, portfolios have equity loss buffer ETFs that are in place given our expectation of market volatility in 2025.

Therefore, we think our portfolios have the right assets in place to help mitigate losses while positioning client portfolios for the eventual market recovery, whenever that might take place. Finally, I respectfully reiterate some of our most relevant predictions from our 2025 Capital Market Report, released back on January 2, 2025.

“However, given there is a political regime change, we anticipate larger deficits, more tariffs, geopolitical tensions, a complicated energy transition, and persistent inflation in the economy.”
“We anticipate a market correction (-10%) at some point during the year, albeit brief in duration.”
“Our client portfolios are strategically designed to include substantial exposure to alternative strategies via liquid, tradable mutual funds. The allocation to these investments is adjusted tactically throughout the year, underscoring their value in providing independent, absolute returns with diminished correlation to market fluctuations.”
“In light of elevated prevailing valuations and policy uncertainties...”
“Our client portfolios are distinguished by a considerable diversity of asset classes, each contributing unique return and risk attributes, with the overarching aim of enhancing portfolio return stability and curtailing volatility.”

Weekly S&P 500 Stock Market Review Recap I For the Month of April 2025 I Kip Lytel CFA, Montecito Capital Management

4/1/2025

April 1, 2025, Monthly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 and the Nasdaq Composite recorded their worst quarterly results since 2022 on Monday, as the uncertainty surrounding the economic agenda of the Trump administration disrupted U.S. equity markets in the first quarter of 2025. The S&P 500 declined by 4.6% for the quarter, while the Nasdaq Composite dropped by 10.5%. The Dow Jones Industrial Average also fell, decreasing by 1.3% during the first three months. In March, both broad equity market indices and technology benchmarks experienced significant downturns, with their largest monthly percentage losses since December 2022, as President Donald Trump introduced a series of new tariffs, raising concerns about a potential global trade war that could adversely affect economic growth and lead to inflation.

Weekly S&P 500 Stock Market Review Recap I For the Month of March 2025 I Kip Lytel CFA, Montecito Capital Management

3/1/2025

March 28, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. As reciprocal tariffs loom, the Dow Jones, S&P 500, and Nasdaq recorded their worst performance in nearly three weeks, driven by inflation and consumer sentiment reports. This resulted in a weekly decline for stocks, further deepening March's losses. The S&P 500 fell by 1.53% this week, while the Dow, which consists of 30 stocks, decreased by 0.96%. The Nasdaq experienced a more substantial decline of 2.59%. Consequently, the Nasdaq is now projected to face a monthly drop of over 8%, which would represent its most significant monthly decline since December 2022. Furthermore, the Conference Board's consumer confidence survey for March hit its lowest level since 2021. The recent drop in consumer confidence, following a series of weak survey indicators, has intensified worries that U.S. consumers may cut back on their spending.

March 21, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500, representing the broad market, recorded a weekly gain of 0.5%, thus avoiding a fifth consecutive week of losses. Similarly, the Nasdaq increased by 0.2% for the week, while the Dow Jones rose 1.2%. The trading session was marked by volatility, with major indices recovering from their earlier lows following President Trump's announcement of potential "flexibility" regarding tariffs. Nevertheless, Trump reiterated that the tariffs set to take effect on April 2 will be reciprocal, indicating that all nations imposing tariffs on U.S. products will face similar charges. The Federal Reserve maintained its interest rates within the target range of 4.25% to 4.5%, although officials projected two rate cuts in 2025. Their economic forecast also anticipated rising inflation and a slowdown in economic growth. During his press conference, Fed Chair Jerome Powell noted that a significant portion of the central bank's heightened inflation expectations is attributed to tariffs. According to the March Summary of Economic Projections (SEP), the median policymaker foresees "no further improvement in core inflation," now estimated at 2.8%, up from the earlier figure of 2.5%, largely attributed to risks associated with tariffs.

March 14, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. S&P 500 ends Friday with the biggest daily gain since November as Big Tech stocks benefited from a recovery rally. But it was a rough week for U.S. equities amid tariffs and government shutdown worries with the Dow down 3.1%, the S&P 500 off 2.3% and the technology-heavy Nasdaq finishing with a 2.4% loss. As of the market's close on Thursday, the S&P 500 Index had declined by 10.1% from its peak, thus entering a "correction" phase, which is characterized by a drop of 10% to 20% from previous highs. It is important to note that corrections are not uncommon and do not necessarily indicate an impending recession. Since 1990, there have been twelve instances of corrections in the S&P 500 that did not lead to a recession. This suggests that, should a recession be averted, equities typically stabilize and recover their previous levels within a year. The average recovery period spans 145 trading days, although some have been as brief as 80 days. Despite numerous negative news reports, we remain optimistic about the potential for growth in the U.S. economy. The February jobs report from last week indicates that U.S. consumers are experiencing genuine income growth, with total nominal consumer income rising by 5% year-over-year, surpassing the long-term average of 3.6% and outpacing inflation.

March 7, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The stock market faced its most challenging week in several months, with the S&P 500 declining by 3.1%, the Nasdaq dropping by 3.45%, and the Dow falling by 2.37%. The Nasdaq is now over 10% below its December peak, officially entering correction territory. This recent market upheaval is thought to be a factor in the US president's decision to delay certain tariffs on Canadian and Mexican products until April 2. Investors reacted to the weekly jobless claims data released on Thursday, which indicated 221,000 initial claims, a decrease from the previous week and below economists' expectations. A series of disappointing economic indicators has raised concerns regarding a potential slowdown in US economic growth, reviving fears of stagflation.

February 28, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The Nasdaq tumbled 3.5% and the S&P 500 fell nearly 1% for the week after concerns over slowing economic growth, President Donald Trump's tariff plans and rising geopolitical risks put Wall Street on edge. Trump wrote in a post on Truth Social that the proposed 25% tariffs on Canada and China would take effect on March 4 after a month-long halt as he believes that both countries failed to take adequate steps to curb the flow of drugs over the border. Investors are also concerned about rising inflation, which has faded hopes of a rate cut by the Federal Reserve anytime soon. Moreover, U.S. economic growth slowed in the fourth quarter with Gross domestic product showing an increase of only 2.3% annualized rate last quarter after accelerating at a 3.1% pace in the July-September quarter, according to the Commerce Department's Bureau of Economic Analysis (BEA).

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of February 2025 I Montecito Capital Management

2/1/2025

February 21, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Stocks experienced a reversal of their weekly gains on Friday as investors became more cautious in response to signs of an underperforming economy. The Dow and Nasdaq fell by 2.5%, while the S&P 500 Index saw a decrease of 1.7% for the week. The University of Michigan reported that consumer sentiment in February dropped to 64.7 from 67.8 earlier in the month, reaching its lowest level since November 2023. This decline represents nearly a 10% decrease from January. Further compounding worries were indicators of weaknesses in the service industry, with declining retail sales, and a 4.9% decline in existing home sales last month.

February 14, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. This week, the Nasdaq distinguished itself with a notable increase of 2.5%, securing the title for the largest gain, while the S&P 500 index experienced a rise of 1.6% over the past five days. The Dow Jones also saw a modest increase of 0.7%. A stronger-than-anticipated inflation report has led investors to reassess their expectations regarding interest rate reductions in 2025. The Consumer Price Index (CPI) for January, released on Wednesday, indicated that overall consumer prices rose more than expected, with core prices reversing the previous month's decline. On a core basis, which excludes the more volatile food and energy prices, January saw a 0.4% increase compared to the previous month, surpassing December's growth. Federal Reserve Chair Jerome Powell emphasized a cautious approach to interest rates during his testimony before the Senate Banking Committee, stating, "With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance." Additionally, U.S. producer prices showed a solid increase in January, reinforcing the notion that inflation is on the rise and bolstering market expectations that the Federal Reserve will refrain from cutting interest rates before the latter half of the year. According to the Labor Department's Bureau of Labor Statistics (BLS), the producer price index for final demand rose by 0.4% last month, following an upwardly revised 0.5% increase in December, while economists had anticipated a 0.3% rise. Furthermore, retail sales experienced their most significant decline of the year, dropping by 0.9% in January, exceeding the expected 0.2% decrease, marking the largest month-over-month drop in retail sales since January 2024.

February 7, 2025, Weekly Stock Market Return Recap, by Kipley Lytel CFA, Montecito Capital Management. The week ended with all three major U.S. stock indices closing lower, following a series of erratic trading sessions driven by tariff-related trade uncertainties and notable earnings from major technology firms. The principal indices finished in the negative, with the Dow Jones and Nasdaq each declining by 0.5%, while the S&P 500 saw a slight reduction of 0.2%. The Labor Department's employment report released on Friday morning revealed that job growth in January was less than what economists had anticipated, although the unemployment rate surprisingly fell to 4.0%. The monthly jobs report is a critical indicator that the Federal Reserve uses in its interest rate deliberations, making it an essential data point for investors. Additionally, the 2-year treasury rate increased by 7.1 basis points, closing at 4.28%, the highest closing figure since January 23rd.

January 31, 2025, Weekly Stock Market Return Recap, by Kipley Lytel CFA, Montecito Capital Management. On the week, the S&P 500 experienced a decline of 1%, while the Nasdaq, which is heavily weighted towards technology, saw a more significant drop of 1.6%. In contrast, the Dow Jones Industrial Average recorded a slight increase of 0.3%. On Monday, global investors responded by offloading technology shares, fearing that the launch of an affordable Chinese artificial intelligence model could threaten the dominance of leading AI companies like Nvidia (NVDA). This resulted in a remarkable loss of $593 billion in Nvidia's market capitalization, marking the largest single-day drop for any firm on Wall Street. In a widely expected move, the Federal Reserve decided to hold interest rates steady after three consecutive cuts, marking the first pause since July 2024. The Federal Open Market Committee reached a unanimous consensus to maintain the target federal funds rate within the range of 4.25% to 4.5%. Policymakers reiterated their dedication to assessing "the extent and timing" of any future rate changes based on evolving data and forecasts. They also noted that the unemployment rate has "stabilized at a low level in recent months," in contrast to earlier descriptions of it having "eased," and confirmed that job market conditions remain "solid." The U.S. economy recorded slower-than-expected growth in the fourth quarter, with the Bureau of Economic Analysis's preliminary estimate showing an annualized growth rate of 2.3%, which is below the 2.6% growth anticipated by economists surveyed by Bloomberg. The Personal Consumption Expenditures Price Index experienced a rise of 0.3% in December, marking the most significant increase since April of the previous year, following an unchanged gain of 0.1% in November, as reported by the Bureau of Economic Analysis within the Commerce Department. Year-on-year, PCE inflation has increased by 2.6%.

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of January 2025 I Montecito Capital Management

1/4/2025

January 24, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Following a notable sell-off in the previous week, the S&P 500 and Nasdaq made a strong recovery, ending the week with a gain of 1.7%.

Throughout the week, investor sentiment was bolstered by positive expectations surrounding robust corporate earnings, advancements in artificial intelligence, and the business-friendly initiatives being implemented by the new Trump administration. Investors are now focused on the forthcoming Federal Reserve monetary policy meeting scheduled for next week.

January 18, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 and Dow Industrials recorded their largest weekly percentage increases since early November, while the Nasdaq noted its best performance since early December. For the week, the Dow Jones increased by 3.69%, the S&P 500 advanced by 2.92%, and the Nasdaq rose by 2.43%. Importantly, the U.S. stock market broadened its rally this week, with every sector of the S&P 500 achieving weekly gains, resulting in the equal-weighted S&P 500 outperforming the market capitalization-weighted version.

The stock market saw a recovery in the latter part of the week, driven by reports of cooling inflation, which suggests progress towards the Federal Reserve's 2% inflation target. The Consumer Price Index (CPI) increased by only 0.2% month-on-month on a core basis, which excludes the more volatile food and energy prices, marking a decrease from November's 0.3% rise. December marked the first instance since July where this metric indicated a slowdown in price growth.

Additionally, the Producer Price Index (PPI) revealed that wholesale inflation rose less than anticipated in December, a favorable development for the economy amidst recent concerns that inflation was not declining as swiftly as desired in relation to the Federal Reserve's 2% target. The Bureau of Labor Statistics reported that the PPI, which monitors price changes experienced by companies, increased by 3.3% year-over-year, up from 3% in November but below the 3.5% rise that economists had forecasted. On a monthly basis, prices rose by 0.2%, falling short of the 0.4% increase that economists had predicted.

January 10, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The robust depiction of the U.S. labor market detailed in Friday's report has led investors to reassess their expectations regarding the timing of interest rate cuts by the Federal Reserve, resulting in a souring of investor sentiment.

The S&P 500 Index has decreased by 115 points, or 1.9%, this week, marking its most significant percentage drop since the week ending December 20, 2024. Currently, the S&P 500 is down 4.3% from its record closing value of 6090.27 reached on December 6, 2024. The Nasdaq Composite has experienced a 2.3% decline for the week, while the Dow Jones Industrial Average has fallen by 1.9%. The U.S. labor market concluded 2024 in such strength that the need for near-term Fed cuts is in doubt; 256,000 jobs were added in December, with the unemployment rate decreasing to 4.1%. According to data released by the Bureau of Labor Statistics on Friday, the number of new jobs significantly exceeded the economists' forecast of 165,000 and surpassed the 212,000 jobs added in November.

Additionally, the Institute for Supply Management's manufacturing PMI indicated continued expansion in the manufacturing sector last month, although the prices paid index surged to a nearly two-year high of 64.4, up from the previous 58.2. This increase in prices raises concerns for the Federal Reserve, as it aligns with the PCE supercore inflation remaining at 3.5% until mid-next year. These recent economic trends serve as a reminder that the Federal Reserve's battle against inflation is far from over, especially as tariffs and immigration restrictions are anticipated to exacerbate price pressures in the coming year. The yield on the 10-year Treasury, which is closely linked to rate expectations, stood at 4.76% late Friday, an increase from 4.68% the previous day, reaching its highest levels since November 2023.

January 3, 2025, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 and Nasdaq have ended a five-day period of losses, although both the S&P 500 and Dow closed the holiday-shortened week with declines of over 1%, while the Nasdaq saw a weekly drop of 2%. Such circumstances often lead investors to adopt a more cautious stance after experiencing a challenging four weeks of market losses. On the economic front, the Institute for Supply Management (ISM) announced that the Manufacturing Purchasing Managers' Index (PMI) increased to 49.3 in December, which is higher than the expected 48.4.

2024 YEAR-END STOCK MARKET RECAP: Last year’s stock market benefited from a confluence of factors that include the rise of artificial intelligence (AI), better-than-anticipated corporate earnings, healthier economy, waning inflation, stock-split euphoria, three Federal Reserve rate cuts, and views that the President-elect will implement pro-business and low-tax policies. Further, the S&P 500's year-to-date earnings are expected to be 8.6%, or 11.3% excluding energy—not a bad finish for what was heralded to be a soft recessionary landing.

The S&P 500 recorded a 23% gain in 2024, which closely paralleled the market's 24% increase from the prior year. This marked the first instance of the index achieving a growth of at least 20% in consecutive years since the internet boom of 1997-1999.

Much like in 2023, the primary contributors to the S&P 500's growth were high-growth technology stocks, including Nvidia, Tesla, Broadcom, Netflix, and Meta, all of which delivered gains exceeding 65% for the year. Nevertheless, the reasons behind the exceptional performance of this limited group of stocks in 2024 were distinct from those observed in 2023. In 2023, the prevailing sentiment was that stocks with rapid earnings growth were best positioned to withstand the pressures of high interest rates, whereas in 2024, the emphasis shifted to companies utilizing artificial intelligence (AI). It is noteworthy that these stocks have retained their euphoria, resulting in the Magnificent Seven stocks being overvalued and representing 57% of the S&P 500 gains in 2024. Accordingly, we would expect more sector rotation in 2025, where the drivers of next year’s returns are likely to fall on the shoulders of several other sectors.

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of December 2024 I Montecito Capital Management

12/1/2024

December 27, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Despite a notably poor performance on Friday, the S&P 500 and Nasdaq both achieved a weekly gain of 1.8%, while the Dow Jones recorded an increase of 1.5%. U.S. consumer confidence dropped to its lowest point since September, with a December reading of 104.7, down from November's 111.7 and below the expected 113.2. While new jobless benefit applications in the U.S. have remained consistent, claims have surged to a three-year high. The Dot Plot forecast anticipates only two rate cuts in the forthcoming year, while projecting a core PCE inflation rate of 2.5%. This indicates that the Federal Reserve expects inflation to remain elevated for an extended period, making significant interest rate reductions unlikely, contrary to earlier market expectations this year. Much of the stock market rally anticipated in 2024 was based on the belief that the central bank would continue to relax monetary conditions in the coming quarters.

December 20, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The Federal Reserve (“Fed”) opted to lower interest rates while suggesting that fewer rate reductions are in store ahead for 2025. Though the S&P 500 saw a 1.1% increase on Friday, ending an 11-day losing streak, it still recorded a 2% decline for the week. The Dow Jones fell by 2.3%, and the Nasdaq experienced a 1.8% decrease over the same timeframe. On Wednesday, the Federal Open Market Committee decided to cut the federal funds rate by a quarter-point, marking its third consecutive reduction, which now places the rate within the range of 4.25% to 4.50%. This decision was largely expected, even in light of ongoing inflationary pressures and a strong economy and job market. Furthermore, Fed officials have revised their unemployment projections for 2025 downward and have updated their inflation forecast for that year to 2.5%, an increase from the 2.1% forecast made in September. The latest figures from the Fed's preferred inflation measure revealed that while month-over-month price increases decreased in November, inflation remains persistent as the central bank strives to achieve its 2% target. In November, the core Personal Consumption Expenditures (PCE) index, which excludes food and energy prices and is closely monitored by the Fed, increased by 0.1% compared to the previous month, a slowdown from the 0.3% rise observed in October.

December 13, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The trading week concluded with U.S. stocks showing mixed results: the S&P 500 and Dow Jones both recorded weekly declines, while the Nasdaq marked its fourth consecutive week of gains. Specifically, the Dow experienced a 1.8% drop, and the S&P 500 decreased by approximately 0.6%, thus ending a three-week upward trend. Conversely, the Nasdaq posted a gain of 0.3%. On Wednesday, inflation data revealed that consumer prices rose in November as anticipated, which may keep the Federal Reserve on track to consider interest rate reductions in December. The Consumer Price Index (CPI) increased by 2.7% year-over-year in November, reflecting a slight uptick from October's annual increase of 2.6%, which was in line with economists' forecasts. Following the U.S. presidential election, consumer sentiment has shown signs of improvement, as indicated by surveys from the University of Michigan and the Conference Board. Furthermore, the National Federation of Independent Business reported on Tuesday that its small-business optimism index surged in November, reaching its highest point since June 2021. A subsequent report from the Bureau of Labor Statistics on Thursday indicated that the producer price index (PPI), which tracks price changes faced by businesses, rose by 3% year-over-year, an increase from October's 2.4% and exceeding the expected 2.6% rise. However, when food and energy are excluded, the core PPI increased by 0.2%, aligning with expectations, while an adjustment for trade services resulted in a minimal 0.1% rise. Despite ongoing inflationary pressures, market participants largely expect the Federal Reserve to lower its key overnight borrowing rate in the coming week.

December 6, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 and Nasdaq Composite reached new all-time highs on Friday, buoyed by November employment figures that were slightly better than anticipated, yet not strong enough to dissuade the Federal Reserve from potentially lowering interest rates again later this month. As a result, both indices enjoyed their third consecutive week of positive performance, with the S&P 500 rising by 0.96% and the Nasdaq by 3.34%. Conversely, the Dow saw a decrease of 0.6% during this period. The Nasdaq, which is heavily weighted towards technology, increased by 0.81% to close at 19,859.77, driven by gains in major tech firms such as Tesla, Meta, and Amazon. According to Barclays, historical trends show that stocks tend to outperform when the Republican Party holds unified control of the U.S. government.

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of November 2024 I Montecito Capital Management

11/1/2024

November 30, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. In the holiday-shortened trading week, the Dow recorded a gain of 1.4%, while the S&P 500 and Nasdaq both increased by 1.1%. This rebound in the major indices followed a downturn in October, spurred by positive sentiment regarding Donald Trump's decisive win in the early-November presidential election. The S&P 500 and Dow Jones wrapped up November with notable monthly increases of 5.7% and 7.5%, respectively, marking their most significant one-month gains of the year. The Nasdaq Composite also saw a rise of 6.2% this month, representing its best performance since a 6.9% increase in May. Traders are anticipating a 25 basis point reduction in borrowing costs by the U.S. central bank at its December meeting, although they expect a halt in rate cuts in January, according to the CME Group's FedWatch.

November 15, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. This week, all three major indexes experienced declines. The Dow Jones Industrial Average fell by 1.2%, while both the S&P 500 and Nasdaq recorded their largest weekly drops since September, decreasing by 2.1% and 3.2%, respectively. The most significant losses were observed in the technology sector, as investors reacted to disappointing earnings reports and concerns regarding the sector's vulnerability to rising interest rates. Federal Reserve officials indicated that further rate cuts next month may not occur as previously anticipated. Notably, on Friday alone, the market capitalization of the six most valuable companies in the S&P 500—Nvidia, Apple, Microsoft, Amazon, Alphabet, and Meta—dropped by $458 billion. Both Amazon and Nvidia saw their market values decline by over $90 billion each. Additionally, major pharmaceutical companies such as Moderna, Pfizer, and AstraZeneca faced declines on Friday following the nomination of Robert F. Kennedy Jr., a vaccine skeptic, by Trump for the position of health and human services secretary. Although retail sales data released early Friday exceeded expectations, suggesting positive economic conditions, it also reinforced the notion that the Federal Reserve may not be as aggressive in reducing its benchmark interest rate as some investors had hoped. Federal Reserve Chair Jerome Powell noted on Thursday that ongoing economic growth, a robust job market, and inflation rates above the central bank's 2% target justify a cautious approach to future rate cuts.

November 8, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 briefly crossed the 6,000 level and finished the week with its largest weekly percentage increase in a year, spurred by Donald Trump's election win and the prospect of a Republican sweep in Congress, which raised hopes for favorable business policies. For the week, the S&P 500 recorded a gain of 4.66%, the Nasdaq rose by 5.74%, and the Dow increased by 4.61%. Trump's election as President of the United States ignited a significant rally in the dollar, drove stock indices to all-time highs, and negatively impacted bond prices, as expectations for tax cuts and tariffs on imports fostered optimism regarding economic growth while also raising inflation concerns. The anticipated deregulation, tax reductions, and growth-oriented policies were pivotal in the market's positive response. Sectors likely to benefit from Trump's victory include traditional energy, defense, real estate investment trusts (REITs), and financial stocks, including those related to blockchain and cryptocurrencies. Trump is expected to reverse regulatory measures and advocate for the oil, gas, and coal sectors. Furthermore, he is likely to implement tax reductions for businesses, which should favor financial stocks, while his stance on cryptocurrencies is also positive. Given Trump's longstanding support for a robust military, defense stocks are expected to perform well. Additionally, the Federal Reserve announced a quarter-point reduction in interest rates on Thursday. "This is a process that requires time," stated Powell during a press conference following the Fed's decision to lower its benchmark overnight interest rate to a range of 4.50%-4.75%. "We continuously assess the net effect of all policy changes on the economy at any given moment. This is a process we engage in with every administration."

November 1, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 index experienced a decline of 1.4%. The Nasdaq composite, which reached a record high on Thursday morning, fell by 1.5%, thereby ending a seven-week streak of gains. Recent data from Wealthmanagement.com’s monthly Advisor Sentiment Index for September indicates that confidence in the economy has risen by three points to 103, moving slightly into positive territory from last month’s neutral reading of 100. On Friday, the Labor Department reported that the economy added a seasonally adjusted 12,000 jobs in October, a significant decrease compared to the September increase of 223,000. Economists surveyed by The Wall Street Journal had anticipated a gain of 100,000, factoring in the impacts of storms and strikes. Both indexes concluded the month with slight losses. Job growth decelerated considerably last month, influenced by the effects of hurricanes and the ongoing Boeing strike. Nevertheless, the unemployment rate remained stable at 4.1%, aligning with economists’ forecasts. The market's attention is now centered on the possibility of a rate cut or a pause as it approaches next week. Two pivotal reports will influence the Federal Reserve's decisions in November. These options are currently under consideration for central bank policymakers at their upcoming meeting on November 6-7, with this week’s reports on inflation and the labor market potentially affecting the final decision. The Fed is already on track for a 25-basis point rate cut in November and is unlikely to change this course, regardless of the incoming data. As of last Friday, investors were pricing in over a 90% likelihood of a 25-basis point rate cut during the Fed's meeting on November 6-7.

October 31, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. In October, the Dow Jones Industrial Average, S&P 500, and Nasdaq all recorded monthly losses. The Nasdaq was particularly affected, leading a decline in U.S. stock markets on Thursday, as earnings from Meta (META) and Microsoft (MSFT) raised apprehensions about the outlook for major technology firms amid escalating artificial intelligence expenses. On that day, the Nasdaq fell by 2.7%, while the S&P 500 experienced a nearly 1.9% decrease on October 31, 2024.

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of October 2024 I Montecito Capital Management

10/1/2024

October 25, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 concluded the week with a decline of 1%, representing its first setback following a six-week period of gains. The stock market is facing challenges as renewed uncertainties regarding the Federal Reserve's interest rate strategy dampen investor enthusiasm for risk. Nevertheless, consumer sentiment has improved for the third month in a row, reaching its highest level since April 2024, as reported by the University of Michigan’s Survey of Consumers. The Consumer Sentiment Index increased to 70.5 in the October 2024 survey, rising from 70.1 in September and surpassing last October’s figure of 63.8. This sentiment is now over 40% higher than the low recorded in June 2022. Tesla emerged as a notable performer following its earnings report, achieving more than a 20% earnings surprise, with gross margins being a frequently highlighted positive aspect. The overall gross margin for the company was 19.8%, an increase from 18.0% in the second quarter and 280 basis points above market expectations.

October 17, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. U.S. stock markets experienced an upward trend, achieving new record highs and concluding their longest weekly winning streak of the year. On Friday, the S&P 500 index increased by 0.4%, surpassing the all-time high established earlier in the week and marking its sixth consecutive week of gains. The Dow Jones Industrial Average led the weekly performance with a 0.9% rise, while the Nasdaq Composite followed with a 0.7% increase. According to Factset, 79% of S&P 500 companies have exceeded earnings per share (EPS) estimates for the third quarter, surpassing the five-year average of 77% and the ten-year average of 75%. In labor market news, applications for jobless claims decreased by 19,000 to 241,000 for the week ending October 12, falling well below the anticipated 262,000. This decline follows a significant spike attributed to Hurricane Helene and an ongoing strike involving Boeing machinists. Minneapolis Federal Reserve President Neel Kashkari expressed agreement with the notion of further gradual reductions in the policy rate in the upcoming quarters to fulfill the dual mandate of low inflation and robust job growth. He noted that the Federal Reserve is nearing its goal of reducing inflation to the 2% target.

October 11, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 advanced by 0.6%, achieving its fifth consecutive week of gains, the longest winning streak since May. The Nasdaq increased by 0.3%, and the Dow Jones ended the week with a 1% rise. Strong bank earnings and further signs of a soft-landing trajectory for the economy contributed to the positive performance of US equity markets. The Consumer Price Index (CPI) recorded a 0.2% rise from the previous month, consistent with the increase noted in August and surpassing economists' forecasts of a 0.1% rise. In September, the CPI rose 2.4% year-over-year, a slight deceleration from the 2.5% annual increase in August. While inflation is showing signs of moderation, it remains above the Federal Reserve's target of 2% on an annual basis. The key inflation measure indicated that price increases did not ease as much as expected in September, although there has been a notable cooling trend over the last two years. The Federal Reserve has recently begun to concentrate on the labor market, which has demonstrated surprising strength in the context of high interest rates.

October 4, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The three primary indices recorded weekly gains, with the Nasdaq leading the way at +1.25%, while the Dow and S&P 500 saw increases of around 0.8% and 0.9%, respectively. A crucial test for the current rally is imminent as corporate earnings reports are set to be released next week, with investors eager to confirm the high valuation multiples through high level earnings growth. The September jobs report has far surpassed expectations, indicating that the U.S. economy added 254,000 jobs, which has led to a decline in the unemployment rate to 4.1%. Wage growth, an essential metric for evaluating inflationary trends, rose to 4% year-over-year, compared to a 3.9% annual increase in August. The strength of the job market considerably reduces the likelihood of a 0.50% interest rate hike this year, and if the economy continues to demonstrate job growth, the prospect of a 0.25% rate cut may also be eliminated. Historically, in the 16 rate-cutting cycles since 1954, equities have significantly outperformed bonds on average, with small-cap stocks yielding slightly higher returns than their large-cap counterparts.

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month Sept 24

9/1/2024

September 27, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. After two weeks of robust stock market gains, the S&P 500 managed to achieve a modest return of 0.62%, while still concluding its third consecutive week of positive performance. The consumer price index in the United States experienced an increase of 3.4% for the year ending in April, a slight decrease from the 3.5% recorded in March, aligning with market expectations. In April specifically, prices rose by 0.3%, a deceleration compared to the 0.4% increase observed in March. Additionally, core inflation in the United States also showed signs of easing last month. In a separate report, data revealed that the eurozone economy expanded by 0.3% during the first quarter of the year. Furthermore, the Conference Board Consumer Confidence Index® decreased in September to 98.7, down from a revised figure of 105.6 in August. The Present Situation Index, which reflects consumers' evaluations of current business and labor market conditions, fell by 10.3 points to 124.3. Meanwhile, the Expectations Index, which gauges consumers' short-term outlook regarding income, business, and labor market conditions, dropped by 4.6 points to 81.7, although it remained above the critical threshold of 80; a reading below this level typically indicates a potential recession.

September 20, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. All major U.S. equity indices experienced significant gains over the week, following a Federal Reserve rate cut that exceeded expectations. The S&P 500 increased by 76.53 points, representing a rise of 1.4%. The Dow Jones Industrial Average rose by 669.58 points, or 1.6%. The Nasdaq Composite gained 264.34 points, equivalent to an increase of 1.5%. The Federal Open Market Committee (FOMC) decided to lower interest rates by 50 basis points, bringing the federal funds rate range down to 4.75-5.00%. In a press conference following the announcement, Fed Chair Jerome Powell expressed satisfaction with the decision, stating, "We made a good strong start and I am very pleased that we did," while also indicating a growing confidence that the nation had overcome its struggle with high inflation. Fed officials forecast that the benchmark interest rate will decrease by an additional 50 basis points by the end of this year, a full percentage point in the following year, and another half percentage point in 2026.

September 13, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Over the course of the week, the S&P 500 experienced an increase of 4%, while the Nasdaq Composite saw a rise of 5.9%, marking the most successful week of the year for both indices. The Dow Jones Industrial Average also made progress, advancing by 2.6% during the same period. Economic indicators suggesting a slowdown in inflation appear to bolster the argument for a potential interest rate reduction, with recent developments now introducing the possibility of a more substantial 0.5% cut by the Federal Reserve. The consumer price index for August registered an annualized rate of 2.5%, the lowest since February 2021. Additionally, wholesale prices increased by 0.2% in August, aligning with market expectations.

September 6, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 and the Nasdaq Composite fell by 1.7% and 2.6%, respectively, as technology stocks suffered significant losses, while the Dow Jones Industrial Average decreased by 1%. The S&P 500 has now recorded four consecutive days of losses, resulting in its largest weekly decline since March 2023, a pattern that was similarly observed in the Dow. Since 1950, the S&P 500 Index and the Dow Jones Industrial Average have experienced their most significant percentage declines during the month of September. Over the past decade, bonds have decreased in value in eight out of ten Septembers, and gold has seen a decline every September since 2017. The S&P 500 has recorded losses in each of the last four Septembers, and this year, the non-farm payrolls data may have increased importance for U.S. equities. This week, investors observed a phenomenon that has not occurred since the summer of 2022: a positively sloped yield curve. In particular, the yield on the 10-year U.S. Treasury note surpassed that of the 2-year notes by a small margin. US manufacturing activity contracts for a fifth straight month. The ISM manufacturing purchasing managers' index (PMI) came in at 47.2% in August – up 0.4 percentage points from 46.8% in July.

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month Aug 24

8/1/2024

August 30, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The stock market ended the week and the month positively, buoyed by economic data that suggests a "just-right" Goldilocks economy, characterized by stable growth and moderated inflation. The Dow Jones Industrial Average rose by 0.6%, marking a record high for the fourth time this week. In addition, the S&P 500 and Nasdaq Composite saw increases of 1% and 1.1%, respectively. The Gross Domestic Product (GDP), an indicator of economic growth, advanced at an annualized rate of 3% during the second quarter, an improvement from the prior estimate of 2.8%. The strength of the U.S. economy is largely attributed to robust consumer spending and business investment. Furthermore, consumer spending in the U.S. demonstrated solid growth in July, suggesting that the economy remains strong despite a moderate rise in prices.

August 23, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. U.S. stocks rallied closer to their records after Fed Chair Jerome Powell said the “time has come” to lower its main interest rate from a two-decade high. For the week, both the S&P 500 and Nasdaq rose 1.4%, while the Dow Jones closely followed with a 1.3% gain. Powell further stated, “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data.”

August 16, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Markets rallied with a strong recovery on news of cooling inflationary trends. The Nasdaq soared 5.3% on the week, as tech stocks jumped after a sharp selloff in recent weeks. The S&P 500 gained 3.9% and the Dow added 2.9% over the week. The data for July indicates a waning of wholesale inflation in the United States, suggesting that price pressures are subsiding. When food and energy prices, which are subject to monthly fluctuations, are excluded, core wholesale prices remained unchanged from June and rose by 2.4% compared to July 2023. These increases were more subdued than what economists had predicted and were nearly in line with the Federal Reserve's inflation target of 2%. Furthermore, consumer prices increased by 0.2% in July, bringing the annual rate to 2.9%, after two consecutive months of stable or declining prices, and falling below 3% for the first time since March 2021. The median change in Core CPI for July was an increase of 0.3%, with a 12-month increase of 4%. Over the last 13 presidential elections, the S&P 500 Index has typically shown positive performance in the 90 days before and after Election Day.

August 9, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Before markets opened on the first full trading week of August, investors were already raddled by a poor job report and recession worries, then before Monday's market open, global equities were further impacted by Japan's Nikkei 225 experiencing its largest daily loss due to an unexpected interest rate hike from the Bank of Japan. It was a wild, chaotic trading week where the S&P 500 sank more than 3% and lost $1.3 trillion in value, notching its worst day since the 2022 bear market. After recovering another 0.5% on Friday, the S&P 500 closed the first week of August near flat, just down 0.05%. The Dow jones was off 0.6% while the finished -0.2% on the week.

August 2, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. All major US stock indices sharply sold off for the week on recession fears and concerns over chip-tech stocks. Both the S&P 500 and the Dow fell 2%, while the Nasdaq dropped by 3%. Disappointing US jobs report spurred recession fears which, in turn, rattled stocks and redirected concerns that the Federal Reserve missed the window to stimulate the economy with an earlier rate cut. In particular, chips stocks took it in the nose after Intel (INTC) plummeted -26% on Friday, after the company cut earnings expectations, its dividend and work force.

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month July 2024

7/2/2024

July 26, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. The S&P 500 and Nasdaq indexes both experienced consecutive weekly losses for the first time since April, with the US broad market equity index dropping by 0.8% and the tech-Nasdaq falling by 2.1%. The U.S. economy saw a growth of 2.8% in the second quarter, surpassing expectations. Despite the prevailing belief that the economy was slowing down, the Q2 growth marked a significant increase from 1.4% in Q1 and exceeded market expectations by nearly a percentage point. Consumer spending has consistently grown by around 2.3% on a year-over-year basis for six consecutive quarters.

July 19, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Amid tech-stock rout, the S&P 500 and Nasdaq posted the sharpest weekly losses since April. The S&P 500 shed 2% for the week, while the Nasdaq dropped 3.6%. The indexes have tumbled amid a selloff in chipmakers and other large-cap technology stocks. Microsoft (MSFT) disrupted many operating systems around the world after a coding error by cybersecurity provider CrowdStrike (CRWD) crashed, thereby paralyzing airlines, trading systems, courts, and other critical services.

July 12, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. All three major US equity indexes finished with gains for the week, led by Dow Jones with slightly more than 2%, followed by the S&P 500 nearly reaching a 1.5% gain, and the Nasdaq setting a new high with almost a 1% weekly gain. June also marked the second consecutive month of soft inflation readings, with the June Consumer Price Index (CPI) report showed core CPI eking up only 0.06% over the month. There are a number of positive factor inputs that are driving the positive returns for stocks in 2024:

The GDPNow model estimate for real GDP growth (seasonally adj annual rate) in the 2Q 24 is 2.0% on July 10, up from 1.5% on July 3
GDP growth in the United States is projected to be 2.6% in 2024
SPX is expected to report Y/Y earnings growth of 8.8% for Q2 2024
CY 2024, analysts are calling for (year-over-year) earnings growth of 11.0%
Interest rate curve forward contracts show 90% chance Sept rate cut & second rate cut to November, with about even odds of a third rate cut by year's end
S&P Dow Jones Indices expects S&P 500 companies to repurchase $885 billion in stock in 2024

July 5, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Stocks rallied on the week led by tech-laden Nasdaq +3.5%, followed by the Dow Jone +0.7% and the S&P 500 +0.5%. Nevertheless, the S&P faces increased concentration risk as the broad market index nears 17% year-to-date, with just five stocks responsible for 63% of the S&P's return in the current year. The latest employment report for June revealed a surge in unemployment up to 4.1%, nearing a level not seen in three years, which has intensified the pressure for the Federal Reserve to consider implementing interest rate reductions come September. The market's confidence in the timing of a Fed cut strengthened Friday, as the futures contract-implied odds of a September cut rose to 75%, up from 64% a week ago, and the chances of two or more rate cuts by the end of 2024 climbed to 71%, up from 63% a week ago, according to CME FedWatch Tool.

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month June 2024

6/1/2024

June 28, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Stocks closed the week with mixed results, but an overall strong showing for the month of June 2024. For the week, the Nasdaq led with +0.8% followed by the S&P 500 adding 0.2%, while the Dow declined 0.5%. Last month’s inflation figure came in sluggish, slowing to its lowest annual rate in more than three years while CPI was essentially flat last month, or just 2.6% from the prior year. As depicted in the below chart, for the month of June, all equity indices finished resoundingly in the green, while the very impressive year-to-date returns were led with greater sector breadth of Information Technology, Utilities, Industrials and Health Care.

June 21, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Stocks finished up for the third week, led by the Dow Jones +1.5%, followed by the S&P 500 +0.6% and the Nasdaq 0.01%. While the tech-infused Nasdaq has been on a tear these past months, the chip-stock rally lost wind as Nvidia (NVDA) pulled back on the week. Before Friday’s Nvidia drop, its market cap stood at $3.1 trillion and was up 170% for the year and was more valuable than the many large European markets like Britain and France. As the upcoming Presidential election starts to make more headlines, a relevant historical benchmark for stocks is the S&P 500 average 6-month return leading up to a Presidential election in early November is 4.67%, which compares to 2.14% in non-election years. [according to Schaeffer’s research]

June 14, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. For the week, US stock market indices finished mixed with the Dow down 0.5%, the S&P 500 up 1.6% and the Nasdaq sharply up 3.2%. The Consumer Price Index (CPI) came in flat over the previous month, and below consensus economic targets. CPI rose 3.3% over the prior year in May, marking a deceleration from April's 0.3% month-over-month increase. However, Fed Chair Powell highlighted upside risks to inflation remain. In particular, he mentioned shelter prices, which showed no indications of slowing for the past 11 months. Stocks overall, however, remain on a positive return trend for both the month of June and year-to-date 2024.

June 6, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. US market equities posted another winning week led by the Nasdaq +2,4%, followed by the S&P 500 +1.3% and the Dow Jones 0.3%. The European Central Bank cut rates for the first time since 2019, adding pressure to the Fed to potentially lighten its stance on the rate policy. Recent data from the U.S. Labor Department has also raised concerns about a potential cooling in the labor market.

June 1, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Stocks rallied for the month of May with the S&P 500 closing with the best performance month since February, up +4.8%. The Nasdaq and Dow also posted gains, up 6.9% and 2.3%, respectively. However, US equities posted losses on the for the last week of May: The S&P 500 finished down 0.5%, Dow was off 1% and the Nasdaq dropped 1.1%. Futures tied to the Fed policy rate increased bets of roughly even odds that the central bank will start to cut rates in September and upped the chances of a second rate cut in December to about the same probability.

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 May 2024

5/1/2024

May 24, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. The S&P 500 narrowly missed breaking its previous record set on Tuesday, but still managed to achieve a fifth consecutive week of gains, eking out 0.03%. The Dow Jones Industrial Average experienced a sharp loss of 2.3%, whereas the Nasdaq composite soared by 1.4% to surpass its previous all-time high established earlier in the week. The inflationary overhang continues to weigh on stocks, which is problematic for the Fed reserve. US business activity accelerated to the highest level in just over two years in May, with the US Composite PMI Output Index coming in hot at 54.4. Any PMI reading above 50 indicates expansion in the private sector.

May 17, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. US equity markets marked another strong weekly performance led by tech-based Nasdaq +2.1% followed by the S&P 500 +1.5% and the Dow Jones +1.2%. Investor sentiment expressed renewed optimism that the economy is heading for a soft landing and may therefore still have Fed rate cut support, while projections for strong earnings continue to fuel stock gain. Consumer price index data for April showed moderating core inflation while retail sales also cooled more than expected. The core CPI, which strips out volatile food and energy prices, rose 0.3% compared to March levels, in line with estimates. Moreover, annual core CPI inflation rate eased to 3.6% from 3.8% in March.

May 10, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA.The broad US market equity index marked its third consecutive weekly positive performance with the S&P 500 finishing with +1.67% return. The S&P 500 now sits only about 1% away from its all-time closing high of 5,254.35 set on March 28, 2024. Stocks were buoyed by job numbers with new claims for unemployment benefits increasing more than expected to a seasonally adjusted 231,000 last week, which sparked hopes for Fed rate cuts ahead. The S&P 500's operating profit margin for the first quarter of 2024 was 11.8%, which is higher than the profit margin for the trailing four quarters of 11.4%, and superior to both the calendar years of 2023 and 2022.

May 3, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. For the week, both the Dow and the Nasdaq gained 1.1% while the S&P 500 finished up 0.6%. Recent economic data show that inflation remains stubbornly above the Fed's 2% target, putting 2024 rate cuts at risk, or at least more muted. Consumer confidence fell sharply in April as inflation worries and a lackluster outlook on the job market squashed optimism to its lowest level since 2022. The Conference Board's consumer confidence index retreated to 97 in April, below economists' expectations of 104, and below March's reading of 103.1.

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 April 2024

4/1/2024

April 26, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. For the week, US equities snapped its losing streak with the Nasdaq soaring 4.2%, followed by the S&P 500 +2.7% and the Dow Jones finishing up 0.7%. The markets were fueled by powerful earnings from Google and Microsoft and encouraging inflation data. The U.S. GDP grew at a 1.6% annualized rate in Q1, below expectations, while the core Personal Consumption Expenditures (PCE) Price Index came in at 3.7% annualized. Consequently, the reemergence of the “stagflation” topic reverberated through the markets. The stock market is also supported by the Federal Reserve leaving three rate cuts on the table for the remainder of 2024, hinting they viewed strong inflation data earlier this year as a temporary rather than a sticky, lingering problem.

April 19, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. For the week, the S&P 500 fell 3.05%, the Nasdaq plummeted 5.52%, and the Dow edged +0.01%. The tech sector has placed significant downward pressure on the stocks and the sector was the worst performing in the S&P 500 for the week. In particular, the Netflix stock drop was one of the bigger drags on the benchmark S&P index. The stock market has also been consolidating downward on lower expectation on the number of Fed rate cuts and the new uncertainties on timing of Fed rate actions. Inflation has been stickier than anticipated and there is a prevailing view that there still might be an abundance of quantitative easing cash in the economy. The S&P and Nasdaq have declined for six consecutive sessions, the longest streak of declines for each since October 2022.

April 12, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. All three major US equity indexes dropped by over 1% for the week on abating consumer confidence and stronger than expected inflation. The University of Michigan's consumer-confidence reading edged down, while US consumer prices came in hotter than expected in March, according to the latest data from the Bureau of Labor Statistics Dow Jone fell 1.2%, while the Nasdaq composite dropped 1.6%. All 11 of the S&P 500's sectors recorded weekly losses, with the S&P 500 finishing down 1.5% on the week; that hasn't happened since September. The Consumer Price Index (CPI) rose 0.4% over the previous month and 3.5% over the prior year in March, an acceleration from February's 3.2% annual gain in prices.

April 6, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. US equities pulled back from record highs on economic data and comments from the Fed, which further clouded the outlook for rate cuts. The S&P 500 declined -0.9%, the Nasdaq Composite pulled back -0.8%, and the Dow Jones Industrial Average fell -1.3%.

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 March 2024

3/1/2024

March 29, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. For the week, US stock indices finished mixed with both the S&P 500 and Dow Jones advancing 0.39% and 0.84%, respectively, with the Nasdaq slipped 0.3%. For the month of March, all stocks indices rallied: the Dow +2.08%, the S&P +3.1% and the Nasdaq added 1.79%. For the quarter, the Dow gained 5.62%, the S&P 500 jumped 10.16% and the Nasdaq shot up 9.11%. During the week, Fed Chair Jerome Powell commented on an important new inflation report: "along the lines of what we want to see" but also indicated that inflation is still on a "bumpy path" to the central bank's goal of 2%. The year-over-year change in the so-called "core" Personal Consumption Expenditures index — which excludes volatile food and energy prices — came in at 2.8% for the month of February. That was in line with the economists’ expectations and down from 2.9% in January.

March 22, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Wall Street optimism on stocks is at its highest level since early 2022, moving all US major indexes over +2% on the week. The S&P 500 gained 2.3% while the Dow climbed 2% marking its biggest weekly percentage advance since mid-December; the Nasdaq rose 2.9%, its biggest weekly percentage rise since mid-January. The Federal Reserve expects three quarter-point rate cuts this year, despite the recent uptick in inflation and the surging stock market. Fed policymakers did trim their expectation for rate cuts in 2025. Still, the Fed's key rate would fall to a range of 3.75% to 4% by the end of 2025. The economy remains elevated by an overall unemployment rate (U-3) at 3.7% with average hourly earnings rising to a nearly 2-year high in January 2024. Indeed, strong data points countered prominent economist forecasts of a looming recession.

March 15, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Stocks finished lower, notching a second consecutive losing week for Wall Street. The Nasdaq dropped 0.7% while the S&P 500 slipped 0.13% and Dow inched lower by 0.02% on the week. Investor enthusiasm ebbed, weighing down on the stock market with hot inflation worries. This week's Consumer Price Index (CPI) report portrayed some price pressures with February's core CPI popping 0.4%, marking a second monthly PPI jump. For those who called January’s hot CPI "a fluke,” the six-month annualized rate of change has been accelerating since last fall. The Labor Department said Thursday that its producer price index (PPI) rose 0.6% from January to February, up from a 0.3% rise the previous month. Measured year over year, producer prices rose by 1.6% in February, the most since last September. These inflationary figures are expected to present a challenge for the Fed’s policy toward easing when it meets next week.

March 8, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. All major US equity market indexes finished down on the week: The Nasdaq Composite tumbled 1.2% to finish the week, the S&P 500 lost 0.3% and the Dow Jones Industrial Average ended the week 0.9% lower. Of the 500 companies in the S&P 500, 74 companies have issued negative EPS guidance for Q1 2024, which is above the 5-year average of 58 and above the 10-year average of 62.

As shown below, 2024 has been marked by the S&P 500 reaching an all-time high (top chart), yet the percentage of stocks trading above their 200-day moving averages has been flat (bottom chart).

March 1, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Several strong earnings reports of the likes of Salesforce (CRM), NetApp (NTAP), and chip stocks (DELL) propelled US equities higher. For the week, the S&P 500 gained 0.95% and the Nasdaq jumped 1.74%. Analysts increased EPS estimates for S&P 500 companies for 2024 in 5 of 11 sectors during the months of January and February, according to FactSet.

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 February 2024

2/1/2024

February 16, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. After five straight weeks of positive stock moves, the equities took a breather on renewed inflation concerns. The S&P 500 declined 0.4% and the Nasdaq dropped 1.3% on the week, while the Dow finished 0.1% down on the week. A hot Producer Price Index (PPI) number sent jitters among some market watchers, with an unexpected 0.3% January increase. Core PPI, which excludes food, energy, and trade services, jumped 0.6%, its largest increase in a year.

February 3, 2024, Weekly Stock Market Return Recap. Bolstered by robust earnings from tech leaders like Meta and Amazon, the S&P 500 finished the week at a new high, up 1.1% for the week. It is no surprise the tech-ladened Nasdaq outpaced the broad market index, surging 1.7% to another new high as well. Fourth Quarter GDP growth came in surprisingly strong at 3.3%, handily beating economists’ expectations of a 2.0% increase and overshooting the Fed’s own model which predicted a 2.4% growth rate. Consumer spending remained the driving force behind the economic growth. On the week, Fed Chair Powell said the Central Bank isn’t "actively considering moving the federal funds rate down." Powell also voiced rate cut hesitancy by indicating policymakers are waiting to gain "greater confidence" that inflation will remain soft to set up a cut conversation: “We want to see more good data [on inflation]. It is not that the six months of data isn't low enough. It is. But whether we can take that with confidence that we are moving sustainably on to 2% is a question.”

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 January 2024

1/6/2024

January 26, 2024, Weekly Stock Market Return Recap. All US equity indexes finished the week in the green, lead by the S&P 500 +1.1%, followed by the Nasdaq +0.9% and the Dow Jones +0.7%. On the economic front, core inflation, which excludes volatile food and energy prices, slowed to 2.9%, a sharper decline than economists were expecting and the most muted rate since March 2021. The market has been uplifted on the year with data showing the ideal scenario for stocks, one where you have both a resilient economy and moderating inflation all which elevate hopes that the Federal Reserve rate cuts will come sooner than later.

January 19, 2024, Weekly Stock Market Return Recap. The broad market stock index closed the week at a new high, with the S&P 500 gaining 1.1%, while the Nasdaq outperformed with a 2.26% weekly return. Stocks continue to be bolstered by rate cuts and positive earnings expectations. All three major equity indices are now up on the year, as this week moved the Dow Jones and Nasdaq out of the red on a year-to-date basis.

January 12, 2024, Weekly Stock Market Return Recap. For the week. The S&P 500 recovered in the week, finishing 1.84% up from last Friday. The broad market stock index currently stands up 0.86% for the year, and now sits just 0.27% below its record close from January 3, 2022. Consumer prices increased more than expected in December as investors continue to look for signs the Federal Reserve can begin to cut interest rates. The December Consumer Price Index (CPI) showed prices ticked up slightly at 0.3% over last month, an increase from the 0.2% seen in November. Prices rose 3.4% over the prior year, an increase from the 3.1% increase seen the month prior. Economists expected prices to increase 0.2% month over month and rise 3.2% year over year.

January 5, 2024, Weekly Stock Market Return Recap. For the week, the S&P 500 notched its first losing week since October on technology stock weakness and an unpleasant hot jobs report. The Dow Jones Industrial Average slipped 0.7%, the S&P 500 declined 1.5% and the tech-heavy Nasdaq fell 3.2%; bonds declined sharply. December job numbers blew out expectations for December at 216,000 jobs gained, Economists were projecting the U.S. to add roughly 170,000 jobs last month, according to consensus estimates. The Fed released minutes from the U.S. central bank's Dec. 12-13 meeting released Wednesday, indicating that officials are largely optimistic about the path of inflation, and expect to begin reducing rates sometime this year. Fed Chair Powell told reporters at the post-meeting press conference, "We added the word ‘any’ as an acknowledgment that we are likely at, or near, the peak rate for this cycle but participants also didn't want to take the possibility of further hikes off the table.

2023 Stock Market Recap I S&P 500 2023 Returns & Insights

1/1/2024

The year of 2023 was a year for growth stocks, but many other equity sectors participated by ending on a positive note. Notably, the technology communication growth sector’s sharp outperformance is unusual because normally when you have a bear market, the leadership for the next bull market is different. Insofar as the S&P 500 finished the year up 26%, it was largely propelled by two sector leaders: Information Technology, up an astounding 58%, and Communication Services close behind, up 56%. Conversely, Utilities and Energy posted -7% and -1% losses on the year, while Consumer Staples and Healthcare were laggards at 0.5% and 2%, respectively.

Looking back to 2023, as we entered last year the 25 Wall Street strategists surveyed were all off the mark, with only three predicting S&P returns of more than 14% and more than half of them forecasting returns of less than 8%. However, we also forecasted modest single digit positive returns for 2023. We nonetheless adapted to the Fed’s dovish rate signals expressed later in the year by adding risk to portfolios, particularly in the fourth quarter (Q4). Consequently, client portfolios not only overcame 2022 market losses, but finished the year firmly in the green.

Another significant market return consideration, and rather unaddressed by Wall Street, is the Aggregate Bond Market Index (AGG) has not recovered its -13.0% loss from 2022, as the intermediate bond index finished with a modest +5.65% for the year. This fact has a material impact on the popular traditional 60/40 balanced portfolio. Indeed, the traditional 60/40 portfolio has a 40% bond allocation, which current stands -9% underwater due to double digit loss in bonds back in 2022.

Financial pundits have made much ado about the “Magnificent Seven” stocks and their impact on S&P 500 returns during 2023. This financial conundrum is worthy of analytic revisit given the lopsided risk these stocks could pose in 2024. First, the combined weight of these companies is greater than any combined weight of the top seven companies in the history of the S&P 500. Second, these seven stocks now account for more than one-quarter of the S&P 500 index weighting. This overdependence on such a narrow stock group can be risky, leaving markets vulnerable to a downturn should the fortunes of the Magnificent Seven falter.

Weekly S&P 500 Stock Market Review Recap I For the Month of May 2025 I Kip Lytel CFA, Montecito Capital Management

Weekly S&P 500 Stock Market Review Recap I For the Month of April 2025 I Kip Lytel CFA, Montecito Capital Management

April 4, 2025, US Tariffs Cause Stock Market Upheaval, Damaging Retirement Portfolios Across America I Potential Future Risks, Portfolio Strategies & Expectations I Special Edition Advisor Commentary

Weekly S&P 500 Stock Market Review Recap I For the Month of April 2025 I Kip Lytel CFA, Montecito Capital Management

Weekly S&P 500 Stock Market Review Recap I For the Month of March 2025 I Kip Lytel CFA, Montecito Capital Management

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of February 2025 I Montecito Capital Management

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of January 2025 I Montecito Capital Management

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of December 2024 I Montecito Capital Management

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of November 2024 I Montecito Capital Management

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of October 2024 I Montecito Capital Management

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month Sept 24

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month Aug 24

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month July 2024

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month June 2024

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 May 2024

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 April 2024

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 March 2024

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 February 2024

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 January 2024

2023 Stock Market Recap I S&P 500 2023 Returns & Insights

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