Wall Street enters the fourth quarter with historic momentum
The last three months of 2024 are here, and Wall Street is riding high. The IS&P 500 closed at a new record on Monday, putting the benchmark up 20.8% for the year, excluding gains. That marks the strongest annual average gain so far in the first three quarters since 1997, the middle of the dot com boom, according to Bespoke Investment Group. Ryan Detrick of the Carson Group said it was the index’s best nine-month gain during an election year, based on data going back to 1950. The Dow Jones Industrial Average and the Nasdaq Composite also saw strong gains with early nine-digit gains. months of the year. In 2024, the Dow is up 12.3%, and the Nasdaq is up 21.2%. .SPX YTD SPX mountain year to date Several developments have driven these sharp gains, including excitement over the power of artificial intelligence to boost corporate profits, and the prospect of easier monetary policy from the Federal Reserve. The Fed last month cut rates by half a percent, and traders expect more cuts before the end of the year. To be sure, investors will have to deal with seasonal pressures in the new month. CNBC Pro’s analysis of FactSet data going back to 1950 showed that October is the most volatile month of the year, with the benchmark estimating a daily movement of 1.3% in either direction. Some investors are also hedging their portfolios ahead of what could signal a US presidential election race. RBC’s head of derivatives strategy Amy Wu Silverman noted that her clients are fighting for “3 standard deviations” in the coming weeks. “The market is lying awake at night and wondering what bad things can happen. I say that because that need in hedging did not take over, but we see it in secondary metrics, “like the Cboe VIX of the VIX Index (VVIX). ), Wu Silverman told CNBC’s “Squawk Box.” The VVIX measures the volatility of the Cboe Volatility Index (VIX) itself – seen by many as Wall Street’s preferred measure of how much investor fear is in the market. “Concern continues to rise. That … is a very different story than the first six months of this year,” added Wu Silverman. Elsewhere on Wall Street this morning, Pivotal Research Group initiated analyst coverage of Alphabet, the parent of Google and YouTube, with a buy rating. “If the situation holds, GOOG appears to be in a strong competitive position with a deep moat around its core search business model (~90% market share ex China) and a clear path to achieving 90%+ (ex China) global device presence (which we believe will dominate the use of an AI assistant), a robust AI platform and financial capabilities to increase financial incentives for handset manufacturers to automate AI,” wrote Pivotal analyst Jeffrey Wlodarczak.
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