Market Update: Third Quarter 2024

Historical insight — Originally published October 31, 2024. Preserved as historical content; information may have changed.

The third quarter of 2024 saw the S&P 500 Index eclipse all-time highs again. That happened as the democratic presidential candidate switched. Prior to August, Donald Trump was polling as a probable winner, with a much tighter race now.

Does that mean that Harris is better for the stock market? No. The market was up when Trump was leading, and the market is still up with a close race. It suggests that there is much more driving the American, and global, economy.

Below (left), you can see a graph of the S&P 500 Index returns color-coded by presidential party. There is no clear party that creates better returns for investors. Interestingly, we do see some data that suggest a divided congress produces higher market returns. This is supported by the idea that business, on whole, prefer predictability to volatility in government policy. It is hard to run a business when the rules change every few years.

During the quarter we got the first rate cut by the Federal Reserve in several years, which happened much later than many predicted. This serves as a base-rate that many lending instruments reference and will help spur the economy forward (or hold it back less). This has corresponded with softening inflation and a weakening dollar. Both of these had been overheated, and this cooling is supporting the American economy.

Long-term investing requires staying invested across different economic cycles, interest rate regimes, and political parties. Keeping a focus on diversification and staying disciplined to your financial plan can help generate better outcomes than timing markets based on politics.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor.

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