At the start of 2023, many expected bonds would outperform stocks in a world of high interest rates. Few predicted that mega-cap tech stocks, the “Magnificent 7,” would dominate the second half of the year and that the U.S. economy would weather the threat of a recession. The start of 2024 has proved to be a continuation of a stock market rally as earnings season from some of the largest names in tech crushed even the loftiest of expectations.
Looking forward, throughout the inevitable ups and downs of the market, we stick to our foundational three pillars when managing your investments: intellect, design, and execution. Utilizing institutional intellect, we can strategically respond and pivot our investment models as needed.
With these three pillars in mind, here are key market themes for 2024:
The softening of the Fed's stance
- We believe that the Fed is now done raising interest rates as they continue to steer our economy into a soft landing.
- The Fed has signaled potential rate cuts to come mid-year.
Opportunity in quality equities & fixed income
- We continue to see opportunities in quality equities but are also seeing select opportunities in undervalued areas of the market that may benefit from a broadening equity rally.
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While bonds rallied in the last few months of 2023, we see an opportunity for high-quality fixed income in 2024 as yields have risen back to around historically normal levels.
Presidential election year
- Individual investors tend to feel nervous about the market leading up to the election because of the uncertainty. Historically, regardless of the political party that takes office, stocks have continued higher.
- In years with pre-election volatility, once the outcome is made clear, the market starts to stabilize itself - even in years where elections have been contested.
- While every election outcome is different, history gives us a baseline for what we can anticipate.
