Interest rates spiked during the month, a sharp reversal from the third quarter. Equity markets declined across regions, with U.S. large cap outperforming, and a negative month for REITs was primarily driven by the rising interest rate environment, as well as the broader beta to the equity market. 

The Federal Reserve has embarked on the latest cutting cycle, with an initial cut of 50 basis points at its September meeting. Financial markets, on average, have performed well following the onset of an interest rate cutting cycle, and market volatility will likely remain elevated as we head into the presidential election.

The Federal Reserve cut rates by 50 basis points during the month, leading to a rally in bond prices as investors anticipated lower future interest rates. U.S. stocks rose due to investor optimism surrounding future rate cuts, improving economic data, and strong quarterly performance, and REITs had a favorable month.

Inflation improvement and weaker economic data shift Fed sentiment

The Federal Reserve acknowledged a cooling labor market and softening inflation at its Jackson Hole summit, indicating its willingness to shift policy. Domestic equity market performance was mixed with large cap positive and small cap negative, and REITs had a positive month as interest rates declined.

Crescent Wealth Management Ranks No. 1091 on the 2024 Inc. 5000 Annual List

Softening inflation and signs of the labor market slowing sent interest rates lower during the month. Market leadership shifted during the month as all eyes remain on the Fed and the possibility of a September rate cut, and REITs had a favorable month.

The U.S. Core Consumer Price Index fell throughout the quarter from 3.8 to 3.3 percent, the lowest since April 2021. Investors complacent in cash may miss potential total return opportunities in core fixed income, and concentration in U.S. large cap markets continues to support returns, with nearly half of the S&P 500 Index constituents underperforming during the quarter and generating negative average returns.

Despite continued volatility, fixed income markets posted positive returns as rates fell slightly during the month. U.S. markets were mixed in June. Concentrated leadership and hype around artificial intelligence benefitted large cap while small cap declined, and REITs were positive during the month on expectations of declining rates.

We are honored to be named as one of Atlanta’s Largest Life Insurance Agencies by the Atlanta Business Chronicle for the third year in a row. We’d like to especially thank all of our partners, staff, and advisors who have been instrumental in our growth and success.