Market Volatility Subsides as Fed Cuts Interest Rates
The third quarter of 2024 saw a significant increase in market volatility, driven by a series of disappointing employment reports that sparked concerns about economic growth. However, the Federal Reserve’s bold decision to cut interest rates by 50 basis points helped to calm nerves and propel the stock market to a strong finish. The S&P 500 Index rose 5.89%, while the small-cap Russell 2000 Index jumped 9.27%, marking a broadening of equity leadership beyond the dominant tech giants.
In this environment, growth stocks trailed value stocks, with the Russell 1000 Growth Index advancing 3.19%, underperforming the Russell 1000 Value Index by over 620 basis points. This shift in market dynamics benefited our Large Cap Growth Strategy, which emphasizes diversification and has a proven track record of delivering strong performance in balanced markets.
Sector-wise, healthcare, communication services, and industrials led the charge, while our stock picks in Meta Platforms, UnitedHealth Group, and Equinix from our stable bucket, and PayPal, Sherwin-Williams, and RTX from our cyclical bucket, made significant contributions to our performance.
As we navigate the complexities of the market, our focus remains on managing risk and delivering consistent, long-term performance. We achieve this by maintaining a disciplined approach to portfolio construction, regularly reassessing our investment thesis, and being mindful of valuation.
In the quarter, we added Accenture and Starbucks to our portfolio, taking advantage of attractive entry points created by market volatility. We also exited three positions that no longer met our investment criteria, including Estee Lauder, Atlassian, and Aptiv.
Our commitment to risk management is unwavering, and we believe that our portfolio is well-positioned to navigate the challenges and opportunities that lie ahead. Whether the economy reaccelerates or recession risks increase, we are confident that our stable and select names can generate above-market organic growth, while our cyclical exposure should benefit from any upswing in the market.
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