Markets rallied in November as investors poured into U.S. stocks following the 2024 election results. All three major U.S. indices ended the month in positive territory, with the S&P 500 and Dow showing record highs. While it was a great month for U.S. investors, international stocks ended down, and developed and emerging markets fell. On the economic front, personal spending and retail sales growth came in strong, and service sector confidence rose to a two-year high.

Markets were down in October across the board, with stocks falling at month-end. Bonds also dropped as traders dialed back expectations for Fed rate cuts. This pullback was largely due to signs of surprisingly strong economic growth, as solid hiring and rising confidence drove consumer spending growth.

September was a solid month for investors, as falling interest rates supported healthy market returns. The S&P 500 and Dow set new all-time highs, while the Nasdaq got close. Still, risks remain. In the U.S., the primary concern is slower growth, as shown by cracks in the labor market. While the Fed’s attempts to support the economy by cutting rates are helpful, a further hiring slowdown could spook investors. Political risks are also rising with the upcoming elections.

August saw a shaky start with an initial sell-off, but it ended on a positive note as markets rallied. Fed Chair Jerome Powell announced it was time to start cutting rates, and stock and bond markets bounced on the news—with the Dow setting a new high and the S&P 500 getting close. The expected rate cuts are based on a slowing economy and the hope that inflation will keep trending downward. Beyond the economy, political risks are expected to rise as the elections get closer. 

It has been quite a couple of days in the financial markets. Today marks the latest in a sharp drawdown around the world. Japan has been hit particularly hard, but the pullback is global. Here in the U.S., for example, the S&P 500 is down about 3 percent for the day (as of this writing) and just shy of 8 percent off its all-time highs. The Nasdaq is doing even worse, down almost 4 percent for the day and 14 percent off its all-time highs.

July was a mixed month for markets, as investors rotated away from tech companies in favor of a more diversified approach. The tech-heavy Nasdaq had a weak month, the S&P 500 ended up a bit, and the Dow Jones Industrial Average did best of all, up by almost 5 percent. On the economic front, we are still in a relatively familiar place as we head into August. Despite some slowing, the economy is healthy and inflation is down.

June was a good month for financial markets. Most stocks were up in the low- to mid-single digits, the S&P 500 and Nasdaq hit record highs, and bond returns were positive on falling interest rates. International results were more mixed—developed markets pulled back slightly while emerging markets were up. Solid economic growth and slowing inflation supported these positive results, and consumer inflation also started to drop.

Most stock indices were up from 3 percent to 6 percent in May, and the S&P 500 and Nasdaq reached new all-time highs. The April employment report and declines in consumer and business confidence helped calm investor concerns about inflation and took interest rates down a bit. Companies showed strong earnings growth, providing a solid foundation for the market.

Rising interest rates pressured stock and bond prices in April. U.S. markets were down in the low-single digits, marking the first monthly decline for U.S. stocks this year. The combination of faster hiring and still-hot inflation complicated the Fed’s efforts to cut interest rates.

U.S. and developed markets set new price records on economic and earnings growth, but fixed income lagged as interest rates rose during the quarter. Income, spending, and business investment stayed positive, but headline and core inflation remained above the Fed’s target levels.