Quarterly Market Review - Q2 2024

Welcome to the RPAG Quarterly Market Review for Q2 2024, where we discuss U.S. equity markets, international equities, the broad U.S. fixed income market, inflation trends, and much more.

• Jeff Elvander, CFA, Chief Investment Officer

Summary

U.S. Equities rose 3.2% (Russell 3000), with large cap tech stocks leading the way. Large growth stocks continued to out-pace large value stocks over the quarter and are ahead by over 1,400 basis points year-to-date (20.7% vs. 6.6%). International equities rose to a lesser extent over the quarter, posting a 1.0% gain (MSCI ACWI ex U.S.). The broad U.S. fixed income market was flat, returning 0.1% (Bloomberg Barclays Aggregate) over the quarter. The Fed held rates steady over the quarter as inflation readings throughout the economy continued to persist. Expectations for rate cuts later in the year were steadily scaled back over the quarter, introducing volatility at the longer end of the curve. The U.S. labor market remained tight during the quarter though unemployment rose slightly 4.1%.

Quarterly and year-to-date returns of the following indices: U.S. Equity (Russell 3000 Index), Fixed Income (Bloomberg Barclays U.S. Aggregate Bond Index) and International Equity (MSCI ACWI ex U.S. Index)

U.S. Equity

• The broad U.S. equity market, as measured by the Russell 3000 Index, was up 3.2% for the quarter.
• The best performing U.S. equity index for the quarter was Russell 1000 Growth, returning a positive 8.3%.
• The worst performing U.S. equity index for the quarter was Russell 2000 Value, returning a negative 3.6%.

Over the last year, growth stocks outperformed value stocks by 20.40%.  For the trailing quarter, growth stocks outperformed value stocks by 10.50%.

The graph above is plotted using a rolling one-year time period. Growth stock performance is represented by the Russell 1000 Growth Index. Value stock performance is represented by the Russell 1000 Value Index.

International Equity

• Developed international equity returned a negative 0.2% in the last quarter (MSCI EAFE).
• Emerging market equity posted a positive 5% return (MSCI Emerging Markets Index).

Over the last year, emerging market stocks outperformed developed international stocks by 0.40%. For the trailing quarter, emerging market stocks outperformed developed international stocks by 5.20%.

Fixed Income

• The broad U.S. fixed income market returned a positive 0.1% (Bloomberg Barclays U.S. Aggregate) for the quarter.
• The best performing sector for the quarter was Cash, returning a positive 1.3%.
• The worst performing sector for the quarter was Corporate Investment Grade, returning a negative 0.1%.
  

Scaled Back Expectations

Expectations for a Fed rate cut have continued to dampen, and significantly so over the past three months. The chart below reflected the market implied Fed Funds rate as of May 31, 2024, versus the implied rates three months earlier. The Fed Funds rate is now expected to be closer to 5% as we close out the year, almost a full percentage point higher than the 4% that was anticipated only three months earlier.

Source: DoubleLine, May 2024

Download a copy of this market review document by clicking here, or contact us at the email address below.

________________________________________