Wes Johnson’s October 2024 Market Update: Stocks, Bonds, and Market Shifts
Wes Johnson from ACT Advisors recently shared an update on what the markets did in September, providing valuable insights into stock and bond market performance, as well as how ACT Advisors is navigating the challenges posed by recent events. In his update, Wes began by addressing the significant impact that a recent hurricane had on the firm’s headquarters in Asheville, North Carolina.
Hurricane Impact in Asheville
ACT Advisors’ main office in Asheville was heavily affected by the hurricane. While the damage caused disruptions, the good news is that all employees are safe and accounted for. Although much of Asheville remains without power, water, and internet, Wes assured clients that ACT Advisors’ remote team is keeping operations running smoothly.
“Our remote workers have got it under control,” Wes explained. While the Asheville team deals with local challenges, ACT Advisors continues to provide uninterrupted service. Wes shared that power has been restored to the office, and Doug English, ACT Advisors’ founder, is working on connecting Starlink satellite internet to bring more of the team back online. Despite these hurdles, clients can still reach the firm as usual via phone or email, and the remote team is fully operational.
September Market Performance: A Shift in Leadership
Turning to the markets, Wes noted that September was a solid month for stocks. Both the S&P 500 and the Dow Jones Industrial Average saw gains of around 2%, a notable shift given that the S&P 500 had consistently outperformed the Dow for most of 2024.
For much of the year, the stock market’s momentum was driven by a small group of companies known as “The Magnificent Seven,” primarily in the tech sector. However, Wes highlighted a recent change in market leadership, with value stocks now taking the lead. This broadening of market participation is a positive development.
“We could not go for very long with just seven stocks carrying the load of the stock market. We needed other areas of the market to step up and participate, and finally, we’re seeing that,” Wes explained. The move toward value stocks signals a healthier, more diversified market environment.
“We could not go for very long with just seven stocks carrying the load of the stock market. We needed other areas of the market to step up and participate, and finally, we're seeing that."
Bond Market: Positive Performance as Interest Rates Decline
The bond market also performed well in September, with bonds gaining 1.3%. While this is modest compared to the stock market, it represents significant growth for bonds. Wes attributed this success to declining interest rates, which have created favorable conditions for fixed-income investments.
Lower interest rates have become evident in many aspects of the economy, including mortgage and car loan rates. However, they also affect savings accounts and certificates of deposit (CDs), where yields have been decreasing. The Federal Reserve is anticipated to cut rates before the end of the year, which would likely continue to support bond market performance.
Election Uncertainty and Market Behavior
As the 2024 election approaches, market uncertainty is to be expected. Wes pointed out that it is normal for the stock market to experience volatility leading up to an election, with potential bumps in the road. However, once the election outcome is determined, markets often rally, which could mean that the final months of the year may show strong performance.
Rotation Strategies: Adapting to Market Momentum
Wes also provided an update on ACT Advisors’ rotation strategies, which adjust client portfolios based on market momentum. In September, the stock rotation strategy shifted into mid-cap stocks, while the bond rotation strategy remained in long-term Treasuries and preferred securities. The firm also added convertible bonds to the portfolio mix.
These strategies allow ACT Advisors to dynamically reposition investments as market conditions change. By focusing on momentum and automatic rotation, the firm ensures that client portfolios are consistently aligned with the strongest performing areas of the market.
