October 16, 2024

Third Quarter Highlights

Financial Markets

  • Quarterly equity returns were strong despite several sell-off periods that even had the Nasdaq index falling into a correction at one point. The rally broadened beyond artificial intelligence related stocks with smaller sized and cyclical stocks posting the best returns.  Chinese stocks surged late in September on stimulus news.
  • Bond yields declined to lows of the year as prices rose boosted by the prospect of lower interest rates.
  • The U.S. dollar moved lower as the interest rate differential between the U.S. and other countries was reduced.
  • Oil prices fell to a 16-month low on weak demand before bouncing late in the quarter on China stimulus and geopolitical news.

Overview of the Economy

  • Earnings reports for the second quarter were better than expected with the majority of companies beating analysts’ forecasts, helped by solid sales growth.
  • The U.S. labor market cooled during the quarter with the number of new jobs added less than 150,000 each month, down from over 200,000 per month in the first half of the year. Also, the number of job openings fell to 7.7 million, down from almost 9 million at the start of the year.
  • In August, the U.S. consumer price index (CPI) annual growth rate was under 3% for the first time since March 2021. Inflation moved lower to near central bank targets in several countries.
  • Surveys still show weak manufacturing activity around the world while services activity remains in expansion.

Notable Events

  • The Federal Reserve Open Market Committee (Fed) cut the fed funds rate by half a percentage point.
  • China announced several stimulus measures including rate cuts, lower reserve requirements for banks, reduced down payment for home purchases, and allowing refinancing of mortgages, but no fiscal stimulus measures yet.