Portfolio Research Director, Kevin E. Donovan, CFA, and Senior Financial Adviser, Parker G. Trasborg, CFP®, discuss markets in the second quarter of 2024 .
Parker G. Trasborg:
Hi, my name is Parker Trasborg. I’m a Senior Financial Adviser here with CJM Wealth Advisers, and as always, I’ve got our Portfolio Research Director, Kevin Donovan. We’ll take a couple minutes to talk about what happened in the second quarter of 2024 as we record this here on July 1st, 2024, just into the third quarter. So Kevin, there weren’t really any major headlines again in the last quarter, just like with the first quarter, but markets did have some volatility. So can you give us a little bit of information about what happened last quarter?
Kevin E. Donovan:
Sure. Yeah. It wasn’t exactly one of those quarters you’re going to look back and remember for any big events, and it looked a little different than the first quarter of the year. So in the first quarter we talked about the market broadening out a little bit beyond the big tech names, and value and growth stocks did growth beat value by a little bit, but not too much. But the second quarter was more like 2023, and so the markets were driven mostly by those big Magnificent Seven tech stocks that we talked about in the past. So companies like Apple, Amazon, Meta, NVIDIA all had good quarters, gains of 20% or more in some of those stocks, and that really drove the S&P higher.
So why don’t we look at the chart for the quarter to date results for the indexes. And you can see at the top that dark purple line is the S&P 500, which gained about 4% and finished almost at an all time high. It set many records during the course of the quarter. So that was the big gainer there. But you notice at the bottom, that light blue line and the orange line are the Dow Jones Industrial Average and international stocks. And those were both negative for the quarter. So we had growth stocks, again, positive, and value stocks, which are more represented in those two indexes being negative for the quarter. So a big difference there between positive and negative stocks.
The green line in the middle is bonds, and they were flat for the quarter. Judging based upon recent past performance, flat is pretty good for bonds in terms of the price appreciation. But while we’re holding those bonds, we are getting paid a higher yield than we have since before 2008. So flat bonds in the second quarter. If we switch to the year-to-date chart, you can still see that the line on top, the purple line, the S&P 500 is way above everything else. It’s up 14.5%. For the year, the Dow and the international stocks are positive at about a 3% to almost 4% gain there. And bonds are slightly negative still for the year, down about 0.7%. So yeah, the main story about the first half of the year is once again, the reemergence of the artificial intelligence stocks really carrying the stock indexes, the S&P 500 in particular, much higher.
Parker G. Trasborg:
Yeah, very heavily concentrated there on the tech and the growth in general. But we have seen actually utilities do pretty well so far this year too. What’s the reason for that?
Kevin E. Donovan:
Yeah, utilities are very interesting this year. Stodgy old utilities, they usually pay a great dividend, which is good for investors to hold. You don’t really expect a lot of price appreciation there, but they are also benefiting from AI. So AI takes a ton of power to all these data centers that are being built, and particularly in our area in Northern Virginia, but around the country, those data centers need lots and lots of energy to power them, and that’s benefiting utilities. So it’s an interesting play on the whole AI craze.
Parker G. Trasborg:
Yeah, it certainly is. So I mean, that’s all the time we have for today. Pretty good second quarter, not as gangbuster as their first quarter. We’ll continue to monitor things as we go through the rest of the year. Keep a close eye on the inflation and what Jerome Powell is talking about and doing and what the Fed is speaking at, the random speaking events that they do. But as always, we thank you for your trust. Thank you very much for what’s happened here in the second quarter, first half of the year, and we look forward to continuing to work with you. Have a great summer, and we will see you next time. Thanks.
Kevin E. Donovan:
Bye.
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