US stocks experienced a volatile pullback starting in Mid-July caused by some worrisome earnings reports from mega-cap tech companies, concerns about a slowing economy and geo-political tensions. Volatility is typically higher this time of the year particularly in election years when the out outcomes are uncertain.
Most market indices held on to positive returns despite a turbulent second half of July. Investors rotated away from the mega-cap tech stocks known as the "Magnificent 7" into value and small cap stocks. The stock market volatility in the second half helped drive bond yield lower pushing up bond fund returns.
The top 10 stocks in the S&P 500 have grown so large that they now represent 35% of the total index because of this concentration investors in the popular index will sink or swim largely based on the performance of those companies. For the first half of 2024 investors benefitted because the top 3 stocks Nvidia, Alphabet and Microsoft collectively were up 49% which accounted for 49% of the index's return. The index as a whole was up 14.5%.
Global equities rose in April despite banking stress and worsening leading economic indicators.
Quick Take Despite the stress in the banking system, including the failure of Silicon Valley Bank, global equity markets held up remarkably well in March and posted solid returns for the quarter. Underneath the calm market surface there was wide dispersion in returns across sectors, market caps and styles. Fixed-income markets had a strong quarter as longer-term bond yields fell, generating price gains.