Federal Reserve cuts rates, S&P 500 strong, corporate earnings projected to strengthen.

From Nasdaq: 2024-10-02 12:00:00

The Federal Reserve has initiated a rate cutting cycle as U.S. equities reach new highs. A positive 10s, 2s UST spread follows a long period of inversion. Double-digit S&P 500 corporate earnings in 2024 are projected to strengthen in 2025. Despite tensions in the Middle East, crude oil prices are at multi-year lows.

S&P 500 has shown a strong uptrend, finishing higher in seven of eight quarters and boasting a 36.3% total return in the last four quarters. Major equity benchmarks are led by the S&P 500 Equal Weight Index in Q3. Despite rate hikes, the market anticipates continued growth in corporate earnings.

Utilities, REITs, Industrials, Financials, and Materials led the ten of 11 large-cap sectors that finished higher in Q3. Energy was the only sector in the red. Small-cap sectors also saw gains, with seven double-digit returns. Despite economic issues, the stock market in China is showing signs of recovery.

Due to lower rates and strong corporate earnings, stocks continue to climb. Rate-sensitive sectors like regional banks have rallied. Corporate earnings growth is expected to slow in Q3 but forecasts show growth in 2024 and 2025. China’s stimulus measures have positively impacted their stock market.

Despite geopolitical tensions and economic slowdown concerns, the stock market continues to show strength. Some sectors are breaking out into new uptrends, indicating potential for further growth. Federal Reserve’s aim to keep the economy stable, along with cheap energy and corporate earnings growth, signal positive prospects for the future.



Read more at Nasdaq:: Third Quarter 2024 Review and Outlook