Weekly Market Update 10/11/2024

Stocks continued to grind higher as the week’s inflation data showed continued normalization and Friday’s unofficial start to the third quarter S&P 500 earnings season was well received.  Oil has risen four of the past five weeks as tensions in the Middle East have risen, but markets have generally been able to overlook geopolitics and focus on the soft economic landing narrative.  Bank results mark the beginning of earnings season and JPMorgan and Wells Fargo both rallied after reporting solid figures Friday morning.  The forward price-to-earnings ratio of the S&P 500 is now 21.4, versus 5- and 10- year averages of 19.5 and 18 (per FactSet), so valuations are fairly rich, and earnings growth will be important.  Next week earnings season continues with banks such as Bank of America, Citigroup, and Goldman Sachs as well as Netflix, American Express, and Proctor & Gamble.

BULL MARKET TURNS TWO

The S&P 500 has risen 10 of the last 11 months, a feat that has only occurred 14 times since 1929 (per Leuthold), and is approaching its two-year bull market anniversary.  While it is tempting to assume such momentum might stall, it is important to note that bull markets typically run for some time.  Below we have provided a chart from Carson Investment Research and since 1950 the average bull market has lasted around 5 years and has risen on average over 180%.  Certainly, we do not take for granted the over 60% rise from the S&P 500 over the last two years, but history would argue there is still upside.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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