The S&P 500 has reached its highest point of the year, with nearly 10% of major companies releasing third-quarter earnings reports. So far, results have been strong, especially with many large banks reporting better-than-expected earnings. Over 75% of companies that have reported so far have exceeded expectations, collectively outperforming forecasts by 6.8%.
In the debt markets, Treasury yields have fluctuated over the past two weeks but stabilized following two key economic reports: retail sales and jobless claims. September retail sales were robust, exceeding expectations and significantly outpacing August’s numbers. However, weekly jobless claims came in higher than expected, which is generally negative for the U.S. dollar. As a result, expectations for a less aggressive Fed easing cycle grew, pushing the 2-year Treasury yield to 4.309% and the 10-year yield to approximately 4.364% as of Thursday.
With only 50 days remaining in 2024 and the next Federal Reserve meeting just 36 days away, here are three essential insights every investor should keep in mind as we approach year-end:
1- Maintain a Solid Portfolio Structure:-
Setting clear goals and creating a long-term investment plan are fundamental to building a well-structured portfolio. Just as you have regular health check-ups with your doctor, it’s important to routinely assess the health of your portfolio. Market conditions and economic dynamics can shift, potentially leading to unexpected changes. Take time to review your asset allocation and rebalance if necessary. Trim overweighted positions or add to underweighted ones to ensure your portfolio remains aligned with your objectives. A balanced and disciplined approach helps manage risks while positioning you to capitalize on emerging opportunities.
2- Acknowledge Risks, but Prepare for Opportunities:-
In a market often driven by short-term news cycles, there’s always something to worry about. However, it’s important to maintain a long-term perspective and stay focused on fundamentals. For example, while the U.S. presidential election and geopolitical tensions in the Middle East may cause concern, these events should not derail long-term investment plans. Historically, markets have achieved gains regardless of the political party in office. Since 1950, the United States has seen 18 presidential elections and 10 transitions between Democrat and Republican administrations. Over these 74 years, U.S. GDP has grown at an average annual rate of 3.2%, while the S&P 500 has compounded at 9.4% per year. Election outcomes, in the long run, do not significantly impact market performance.
3- Leverage Tools to Improve Portfolio Efficiency:-
Embracing modern technologies and innovations in investment strategies can enhance long-term portfolio performance. One such tool is artificial intelligence (AI), which is transforming active portfolio management by enabling better data analysis and faster decision-making. In today’s rapidly evolving market, these tools provide investors with a competitive edge and help them navigate market complexities more efficiently.
As markets continue to evolve, maintaining a disciplined approach based on sound investment principles remains crucial. These insights are designed to guide investors not just through the remaining 50 days of 2024 but also beyond. The key takeaway is that while market conditions may change, a strategic, well-informed approach will always be essential to achieving long-term investment success.
