Second Quarter 2024 In Review

Market Overview

The second quarter of 2024 has been a solid one. While not quite the knock-out numbers from the first quarter of this year, we should still be pleased. Small cap stocks were down, but most stock markets continue to quietly, sneakily trend higher. Of course, this is what stocks do over very long periods of time. We sometimes get mania-fueled rocket-to-the-moon booms but most of the time we see simple trends upwards. Yes, it is always two steps forward and one back, but over time we see the long rise in values.

Someday in the future we’ll get a real step backwards, a real leg down, and we’ll start to wonder if everything is falling apart. It won’t be. It will just be more of the same natural course of events that we are in now, the other side of this coin. The step backwards is much more noticeable to us, even though it occurs much less often and is always temporary. For now, we can be pleasantly bored with market returns and go about the more enjoyable parts of our lives.

	2Q 2024	1 Year	3 Year	5 Year
Large Cap US Stocks	4.28%	24.56%	10.01%	15.05%
Small Cap US Stocks	-3.28%	10.06%	-2.58%	6.94%
International Equity	-0.42%	11.54%	2.89%	6.46%
EM Equity	5.00%	12.55%	-5.07%	3.10%
Aggregate Bonds	0.34%	3.13%	-2.44%	0.12%

_{Index performance is provided as a benchmark. It is not illustrative of any particular investment. An investment cannot be made in an index. Past performance is not an indication of future of results. S&P 500, S&P 600, MSCI EAFE Index, MSCI EM Index, S&P US Agg Bond Index. Returns as of 6/28/24.}

Economic Update

Things in the US economy continue to look good but not spectacular, which is essentially what the Federal Reserve is shooting for after a few years of trying to tame inflation. Higher interest rates have had a direct impact on the housing market, but the job market remains very healthy and household income is stable.

Disposable personal income (income after taxes) was up in the US 3.7% annualized through May, a solid and consistent number that is trending just ahead of inflation.

Inflation has cooled as higher interest rates work their way through the economy. We have come down from the mid-2022 peak back to 3.3%, a historically “normal” level of inflation.

Initial jobless claims still remain essentially flatlined as unemployment stays very low. Although trending very slowly higher, the unemployment rate is still near historic lows at 4.0%.

Real Gross Domestic Product was lower in the first quarter at 1.4% (annualized rate of change). Expectations for the second quarter are higher, between 2-2.5% according to GDP Now from the Atlanta Fed.

The housing market has cooled slightly due to higher mortgage rates. New home sales are down and listing supply is up. Still, national average home prices were up 6.3% year over year.

Mortgage rates are high, but have leveled off at just under 7%.