The Independent Market Observer

Surveying the Economic and Market Landscape

July 19, 2024

“Life moves pretty fast. If you don't stop and look around once in a while, you could miss it.”
— Ferris Bueller

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2024 Midyear Outlook: Can Investors Find Solid Ground in Fixed Income?

July 15, 2024

When we began 2024, six interest rate cuts were expected. But with stickier-than-expected inflation and strong job growth, markets significantly lowered those expectations. As a result, rising interest rates created headwinds for rate-sensitive assets, although a resilient economy helped lower-credit-quality parts of the fixed income market (e.g., high-yield and bank loans) outperform their higher-credit-quality counterparts.

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Q2 2024 Earnings Season Preview: Time to Show Me the Money!

July 11, 2024

Anyone familiar with the movie Jerry Maguire knows the phrase, “Show me the money!” Well, after several quarters of beating low expectations, it’s time for companies in the S&P 500 to show us the money and put up solid earnings growth. Analysts expect earnings growth of 8.8 percent as of July 3, 2024, which would be the highest growth rate since Q1 2022 when it was 9.4 percent.

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2024 Midyear Outlook: The Tug-of-War Between Earnings Growth and Valuations

July 10, 2024

The story of 2023 was the recession that never was and the end of the interest rate hiking cycle. Corporate earnings growth beat expectations, and the S&P 500 saw a 26 percent return. And in the first half of 2024, that upward trajectory largely continued. Large-cap stocks have led the way, while mid- and small-caps have lagged. Value stocks have underperformed growth stocks, with higher earnings growth for growth stocks keeping them in the lead. 

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What Will the Second Half Hold for the S&P 500?

July 9, 2024

In my last blog post written just over three months ago, I discussed the S&P 500’s notable Q1 return and its historic five-month return. Historically, both indicated that a strong Q2 return was likely. Fast-forward three months and the S&P 500 posted a Q2 return of 3.92 percent.

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Looking Back at the Markets in June and Ahead to July 2024

July 9, 2024

June was a good month for markets, with most indices up in the low- to mid-single digits. The S&P 500 and Nasdaq hit new highs during the month, and bond returns were positive due to falling interest rates. International markets were more mixed in June, as developed markets fell on rising political uncertainty while emerging markets were up for the month. Solid fundamentals and an improving economic backdrop helped support returns in June.

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2024 Midyear Outlook: Navigating the Geopolitical Waters

July 2, 2024

Recently, inflation and interest rates have dominated the headlines. And for good reason—they are known market and economic risks. But as we look toward the second half of 2024, investors must also be prepared to navigate the geopolitical risks, whose twists and turns can often lead into uncharted territory.

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What the 2024 Elections Could Mean for Portfolios

June 27, 2024

Many Americans will be tuning in to tonight’s first presidential debate not just for the entertainment but to gauge what policies the candidates lay out and how they could affect their portfolios. But the truth is that nearly half the world’s population will face national elections this year, with several already concluded. It’s important to keep in mind that these elections will impact those portfolios with significant international exposure and those with U.S. exposure. 

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2024 Midyear Outlook: Slower Growth Ahead for U.S. Economy?

June 27, 2024

So far in 2024, the U.S. economy has traveled a winding road. As we began the year, expectations were for turbulence ahead, given stubbornly high inflation and interest rates, restrictive monetary policy from the Fed, and a slowdown in consumer and business spending. Instead, strength in hiring fueled consumer spending despite rising rates. Still, GDP growth slowed to 1.3 percent in the first quarter (from 3.4 percent in the fourth quarter of 2023), leading to more uncertainty on where the economy will go in the second half of the year. 

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Is There a Case for International Equities?

June 20, 2024

As the fears about Y2K dissipated and the dot-com boom entered its last few months, the world’s equity investment opportunity set was split roughly 50 percent in the U.S. and 50 percent in the rest of the world. Fast-forward to today, and approximately 64 percent of global market capitalization is in the U.S. This shift has resulted from the U.S. equity market’s outperformance since the end of the great financial crisis more than a decade ago.

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Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.

The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.

One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

The VIX (CBOE Volatility Index) measures the market’s expectation of 30-day volatility across a wide range of S&P 500 options.

The forward price-to-earnings (P/E) ratio divides the current share price of the index by its estimated future earnings.

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