Resilience and Sustainability
Overview
Following a 26% rise in 2023, the S&P 500 advanced by 22% in the nine months ended September 30, 2024. By third quarter end, the S&P 500 had reached another all-time high, exceeding the January 2022 peak by 20% and the march 2020 COVID low by a resounding 158% (see Figure 1). Equity market performance remained highly concentrated in the first half of 2024, with the Magnificent Seven surging 33%, compared with a 5% gain for the “Other 493” S&P 500 stocks.
The market demonstrated extraordinary resilience in the third quarter as the hyper-concentration of the past two years began to unwind. The market rose 6% in the third quarter as the Magnificent Seven faltered and the “Other 493” picked up the slack. For the first time in more than two years, the equally weighted S&P 500 outperformed the S&P 500. The expanded market breadth was good news for sustainability-themed strategies, which rebounded.
The US economy and corporate earnings have also been resilient as inflation has stabilized at a lower level (at least for now) and the Fed decisively pivoted toward lower interest rates. Unlike their impact on stock market performance – and thus far, the current election cycle is no different. Geopolitical tensions, particularly the ongoing conflicts in Ukraine and the Middle East and strained US-China relations, continue to cast a shadow over the global outlook, and the US Federal budget deficit remains a key long-term risk.
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