Monthly Market Update for October 2024

Monthly Market Update for October 2024

Key Points – Monthly Market Update for October 2024

• Assessing the Federal Reserve’s Goals
• Mixed Market Performance for October
• Declines in Overseas and Emerging Markets
• A Spike in Longer-Term Rates
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Monthly Market Update for October 2024

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Assessing the Fed’s Goals

In the late September Federal Open Market Committee (FOMC) meeting, the Federal Reserve cut interest rates by 50 basis points, lowering the target range to 4.75% to 5%. This marked the first rate cut in four years and was aimed at supporting economic growth amid signs of slowing inflation and moderate economic expansion.

The decision reflected the Fed’s dual mandate to promote maximum employment and price stability. Projections indicated a stable economic outlook with GDP growth around 2% and inflation gradually returning to long-term targets. The move was seen as a proactive measure to sustain economic momentum.

The key excerpt from the accompanying statement was that the committee, “Gained greater confidence that inflation is moving sustainably toward 2%.₁”

Last week, the Fed held its November meeting and opted to cut short-term rates by an additional 25 basis points.₂ There is one FOMC meeting left for the year, which will happen on December 18.

FIGURE 1 – Fed Watching – Federal Reserve

Mixed Market Performance for October

It was a sideways move for the S&P 500 during October, closing out the month very close to where it started.₃ Large-and mid-cap stocks held up much better than small-cap stocks and added to the divergence of large versus small that we’ve seen throughout the year. Technology exhibited continued strength, along with financial services.

Overall, October was a month of mixed performance with notable volatility, but underlying economic indicators suggest potential stability moving forward.₄

FIGURE 2 – Sideways Market – Koyfin

FIGURE 3 – Sideways Market – Morningstar Direct

Declines in Overseas and Emerging Markets

In overseas markets, the MSCI EAFE Index—which tracks large-and mid-cap stocks across 21 developed countries—experienced a decline of 5.4%.₅ This drop was influenced by rising bond yields and mixed economic data. Emerging Markets fared slightly better but still were down 4.4% for the month.₆

FIGURE 4 – Difficult Month for International Stocks – Morningstar Direct

A Spike in Longer-Term Rates

Turning to the bond market, the U.S. 10-year treasury spiked higher, creating a difficult backdrop for fixed income markets.₇ The spike in longer-term rates happened despite the Fed embarking on a short-term interest rate cutting cycle at the end of September. As rates moved higher, the Bloomberg Aggregate Bond Index fell by 2.5%, reflecting market adjustments to inflation data and future rate expectations.

FIGURE 5 – 10-Year Treasury Rates Move Higher – Koyfin

Stay Tuned for the November Monthly Market Update

We’ve also reached the conclusion of a seemingly long presidential election race. We look forward to discussing the market impact during our November market update. If you have any questions about what we covered in our Monthly Market Update for October 2024 and what it could mean for you, start a conversation with our team below.

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Resources Mentioned in This Article

• Fed Rate Cut – Q3 2023 Quarterly Market Update
• 10 Ways to Fight Inflation in Retirement
• How Bonds Fit into Your Financial Plan

Other Sources

[1] https://www.federalreserve.gov/newsevents/pressreleases/monetary20240918a.htm#

[2] https://www.federalreserve.gov/newsevents/pressreleases/monetary20241107a.htm

[3] https://app.koyfin.com/charts/gm/id-5rg2y9#

[4] https://www.morningstar.com/news/marketwatch/20241031312/these-are-the-sp-500s-biggest-laggards-for-october-down-by-as-much-as-29

[5] https://www.morningstar.com/etfs/arcx/efa/chart

[6] https://www.nepc.com/nepcs-october-2024-market-commentary/

[7] https://app.koyfin.com/gyld