Market Commentary
Monthly Market Commentaries identify recent drivers in the capital markets. Each commentary is authored by a member of Innovest's Research Team.
March 2024 Market Commentary
Domestic equity markets continue to rally, with the S&P 500 returning 3.22% in March. The U.S. economy remains resilient and has led to positive performance in nearly every S&P 500 sector. Mega-cap tech companies, however, still lead the broader market.
February 2024 Market Commentary
Domestic equity markets had a strong month, with the S&P 500, NASDAQ, and Dow Jones Industrial Average hitting new all-time highs. Large cap technology companies, notably AI-adjacent companies, continue to drive the performance of the indices, with NVIDIA reporting stronger than expected earnings and continuing its rally.
January 2024 Market Commentary
The S&P 500 Index started 2024 up 1.68%, posting new all-time highs on six different occasions throughout the month. The continued rally was driven primarily by strong earnings from mega cap technology companies, with Meta tripling its profits from January of last year, resulting in a 20% surge and an additional $200 billion in market cap. Overall, the “Magnificent Seven” continued to lead the market and accounted for 45% of the index’s January return.
December 2023 Market Commentary
The S&P 500 Index finished 2023 up 26.29% on the year, and up 4.54% in December alone. Domestic equity markets rallied into the end of the year, fueled by optimism about the shifting sentiment of the Fed, cooling inflation, a resilient labor market, and robust consumer spending.
November 2023 Market Commentary
Inflation cooled in October, rising 3.2% on a year-over-year basis, compared with 3.7% in September. This is largely due to a sharp decline in the price of gasoline, and energy as a whole.
October 2023 Market Commentary
The Bureau of Labor Statistics reported that, although the US labor market has been slowing, 150,000 jobs were added last month. This figure fell short of initial market expectations but completed a strong month of employment growth. The unemployment rate increased to 3.9% in October.
September 2023 Market Commentary
The S&P 500 Index declined -4.77% in September, bringing its total year-to-date (YTD) return to 13.07%. The S&P 500 remains very concentrated, with the top 10 stocks representing over 30% of the market capitalization of the index. These top 10 stocks, mostly technology companies, have driven nearly 22% of rolling 12 month returns.
August 2023 Market Commentary
Since the start of the COVID-19 pandemic, there has been a growing interest in "nearshoring" (bringing manufacturing closer to the U.S.). Factors such as the conflict in Ukraine, U.S.-China tensions, tariff implementations, etc. have fueled this shift in supply chain dynamics. These transformations are now visible in trade data. Notably, both Mexican and Canadian imports have exceeded Chinese imports, marking the first time since 2008 that China is not the U.S.'s leading source of goods imports.
July 2023 Market Commentary
From June to July, the technology-focused NASDAQ index exhibited a noteworthy return of 9.50%, resulting in a year-to-date increase of 38%. This surge can be attributed to investors' favorable outlook on sustained progress in the realm of artificial intelligence, coupled with a decline in apprehensions surrounding the possibility of a recession in the United States.
June 2023 Market Commentary
Although economic activity appears to be waning, macroeconomic data remains strong. In May, core retail sales rose 0.4%, surpassing expectations. Additionally, housing activity, including home sales, building permits, and housing starts, experienced a rebound.
May 2023 Market Commentary
On May 31st, the House passed legislation to suspend the debt ceiling and set federal spending limits. The bill passed through the Senate on June 1st, allowing the Department of Treasury to continue paying the government’s obligations and avoid default. Equities edged higher after news of the debt ceiling deal.
April 2023 Market Commentary
The United States officially hit its debt limit on January 19th. Since then, the Department of the Treasury has been working to prevent the binding of the debt limit, adding to the volatility across bond and equity markets. The Department of the Treasury is using accounting maneuvers to continue paying the government’s obligations and avoid a default. The president is set to meet with Republican and Democratic leaders at the White House on May 9th to discuss a path forward.
March 2023 Market Commentary
The S&P 500 Index returned 3.67% in March, bringing its total return to 7.50% for the first three months of 2023. This positive performance comes as a surprise to many investors as headlines frequently discussed a banking crisis and slowing economy. Large cap equities outperformed small cap as many investors preferred the safety of revenue-generating, established institutions. The tech-heavy Nasdaq 100 Index had its best quarter since 2020.
February 2023 Market Commentary
In the latest Quarterly Report on Household Debt and Credit, the New York Fed found that household debt has risen to nearly $17 Trillion, and delinquency rates have increased for almost all debt types. In addition, credit card balances have surpassed pre-pandemic highs, as some households may seek to keep up with inflation by opening lines of credit.
January 2023 Market Commentary
International and emerging markets stocks performed well alongside domestic stock markets this month. Emerging market stocks returned 7.90% in January, largely credited to the abrupt end of China’s zero-COVID policy and expectation of economic recovery.
December 2022 Market Commentary
The Federal Reserve’s actions are being felt in the economy, as layoffs have been steadily increasing over the final weeks of the year. As the economy contracts given rate hikes, businesses may be forced to freeze hiring or cut jobs, ultimately leading to an increase in national unemployment.
November 2022 Market Commentary
Domestic equities had another positive month in November, with the Russell Mid Cap Index leading the way, up 6.01%. International (Developed) and Emerging Markets stocks were up on the month 11.26% and 14.83%, respectively, bolstered by signals from the Federal Reserve of slower future rate hikes that weakened the US dollar.
October 2022 Market Commentary
Positive earnings reports led to positive returns from leading technology and consumer discretion companies such as Apple and Amazon. The S&P 500 Index was up 8.10% in October, breaking its multi-quarter losing streak. The Index was still down -17.70% year-to-date as of the end of October.
September 2022 Market Commentary
In addition to human loss, Hurricane Ian has taken an economic toll on the state of Florida. The storm is predicted to cost between $70 and $120 billion, placing Ian in the top ten costliest storms in U. S. history. Industries impacted the most are tourism, agriculture, mining, and insurance, with supply chain issues impeding numerous retail goods, food, and automobiles. While the impact on the broader U.S. economy is unknown, given that Florida has the fourth largest GDP in the country, the national economy will likely be impacted for weeks to come.
August 2022 Market Commentary
After their best month in two years, US stocks saw negative returns in August as the Fed’s hawkish stance put downward pressure on equities. US large cap stocks, as measured by the S&P 500 Index, posted a ‐4.08% return on the month. Mid and small cap stocks struggled slightly less with the Russell Mid Cap and Russell 2000 Indices returning ‐3.14% and ‐2.05%, respectively.
July 2022 Market Commentary
US stocks had their best month in two years while the economy received discouraging news about both growth and inflation. Small capitalization stocks led the way as the Russell 2000 gained 10.44%, while the S&P 500 Index trailed closely posting a 9.22% return. July proved once again that the market is not the economy.
June 2022 Market Commentary
The S&P 500 Index posted a -8.25% return in June, closing 20% below its January high and officially entering a bear market on June 13th. By month’s end, the index showed a -19.96% return, year to date, the worst start to a year since 1970.
May 2022 Market Commentary
Core Fixed Income posted a positive return, up 0.64% in May after posting its 3rd worst rolling 2-year period ending March 31, 2022 – an average annual return of -1.8%.
April 2022 Market Commentary
The S&P 500 Index posted a -8.72% return in April, bringing the year-to-date return to -12.92% heading into May. January through April 2022 marks the worst start to a calendar year in the S&P since 1939. The NASDAQ slid -13.24% in April, its worst month since October 2008.
March 2022 Market Commentary
Unemployment continues to approach pre-pandemic figures, as March posted 3.6% unemployment. Although generally a strong indicator of economic conditions, Federal Reserve Chair Jerome Powell warned that labor market tightness may have reached an undesirable level.
February 2022 Market Commentary
Continuing to slump, the S&P 500 Index posted a -2.99% return in February. Inflation continued to trend upwards due to lingering supply chain problems and broad-based price surges across the global economy following Russia’s invasion of Ukraine..
January 2022 Market Commentary
The S&P 500 index posted a -5.25% return in the month of January, marking the worst month of performance since March 2020. One explanation for the downturn was the Federal Open Market Committee’s talk of quantitative tightening to combat ongoing inflation.
December 2021 Market Commentary
U.S. fixed income returned -0.26%, measured by the Bloomberg US Aggregate Index, as long-term interest rates ended the year higher than they started. Municipal Bonds saw a slight gain of 0.13% over the month, ending the year up 0.34%.
November 2021 Market Commentary
Market volatility returned amid increasing COVID-19 cases and inflationary pressures. The CBOE
Volatility Index (VIX) realized its largest monthly increase since February 2020, increasing nearly
69% from its lowest point to its highest in the month.
October 2021 Market Commentary
The 3Q21 earnings season has been exceptionally strong. With 280 companies reporting as of 10/31/21, 82% have beat earnings expectations and 66% have beat revenue expectations. The boost in earnings helped to propel U.S. equities during the month with large, mid, and small capitalization stocks up 7.0%, 6.0%, and 4.3%, respectively.
September 2021 Market Commentary
The United States services sector lost steam in August due to the Delta variant’s increased impact on economic activity. Services in the U.S., which make up approximately 70% of GDP, continue to face intense labor shortages, particularly in the restaurant and transportation industries.
August 2021 Market Commentary
The United States services sector lost steam in August due to the Delta variant’s increased impact on economic activity. Services in the U.S., which make up approximately 70% of GDP, continue to face intense labor shortages, particularly in the restaurant and transportation industries.
July 2021 Market Commentary
On the heels of increased regulation in the technology and private education industries, Chinese stocks played a substantial role in the 6.73% decrease of the MSCI Emerging Markets (EM) Index in the month of July. Currently, Chinese stocks make up over one-third of the MSCI EM Index.