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Market Commentary
July 9, 2024
S&P 500 Index returns, which had begun to broaden beyond a handful of tech-oriented stocks late in the first quarter, became incrementally more concentrated as the second quarter progressed. By June, only 20 percent of S&P 500 constituents had a one-month return higher than the overall benchmark. And just one stock, Nvidia, represented a whopping 44 percent of the S&P 500’s second-quarter return of +4.3 percent. By comparison, the S&P 500 Equal Weight Index fell -2.6 percent during the second quarter, representing the largest calendar quarter performance differential since the first quarter of 2020 and the fourth quarter of 1999 before that. Many stocks de-rated in the quarter to discount higher-for-longer rates, something Treasuries had started to do the quarter prior. While long-duration and other rate-sensitive stocks would usually underperform in such a situation, fear-of-missing-out investors crowded into artificial intelligence stocks and their derivative plays (e.g., utilities).
Relatively full valuations for stock indices after another solid quarter of returns, signs of decelerating economic growth, and the upcoming presidential election signify a high likelihood for considerable market volatility in the near term. As such, stock selection remains imperative, with the plummet in stock correlations providing an excellent opportunity for stock pickers. Despite technology’s dominant role in higher stock indices, we maintain an overweight position across equity strategies.
For our latest full Global Investment Outlook & Strategy Update, download the .pdf document.
2024 Seminars
Sit Mutual Funds will be offering three different investment seminars this summer. For content and date information please visit the 2024 Seminars page.