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.

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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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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%.