What will drive the S&P 500 this fall

When 2024 began, there changed into deep concern that the foremost indexes were showing big gains from a extremely narrow range of stocks.

Narrow range as in: tech, tech and more tech.

Monday brought a in the case of both September and the third quarter. So, it truly is time to appear how stocks have moved around.

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For the year so far, tech remains to be the leading market sector within the Same old & Poor's Five hundred Index, up 29.6%. But most of those gains were achieved within the primary quarter. It be when stocks like Nvidia (NVDA) were soaring as investors had changed into enthralled with the postulate and, they hoped, the promise of  artificial intelligence.

With the Federal Reserve cutting interest rates, the broadening that hit U.S. stocks within the third quarter is probably going to continue.

Federal Reserve Chairman Jerome Powell in a Monday speech all but promised two more rate cuts within the 2024, most definitely zero.25% per cut. On Sept. 18, the Fed cut its key federal funds rate to 4.seventy 5% to five%, its first rate since 2020.

That should pull down interest rates for everyone, with a 30-year mortgage rate dropping below 6% eventually.

There two risks to the scenario: The port strike liable to erupt Monday night and the threat of broadening war within the Middle East.

The Dow Jones industrials, down as many as  315 points within the course of the session, finished up 17 points at a record 42,330.15. The S&P Five hundred changed into up 24 points to a record 5,762.forty eight. Nasdaq Composite index added sixty nine.fifty eight points to 18,189.17, about 2.5% below its July 10 record close of 18647.45.

Tech stocks take a breather

Nvidia on my own changed into up 82% within the primary quarter on my own and remains to be up 145.2%. But its third-quarter changed into now not one to write home about: The shares fell 1.7%. thanks in part to a 5% loss in July.

But the S&P Five hundred finished the quarter up 20.eight% for the year so far. That changed into the biggest gain for the duration of the third quarter of any year since 1997.

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The third quarter overall changed into dominated by an enormous interest in utilities stocks. The S&P Five hundred's Utilities sector changed into up 18.5% for the quarter and 6.4% in September. Real estate stocks jumped sixteen.three%, with a 2.eight% gain in September.

What came about? Investors started to be troubled that tech stocks had changed into  overbought — in point of fact wildly overbought — and looked toward stocks that would maybe take pride in lower interest rates.

Utilities Vistra (VST) , up 38.eight%, and Constellation Energy CEG, up 32.2%, were the appropriate S&P Five hundred performers in September. (Along with they stand to take pride in the buildout of infracture to power AI installations.)

The laggards: Oil and gas producer APA Corp. (APA) , down 14.2%, and Dollar Tree (DLTR) , down sixteen.eight%.

Home Depot (HD) and Caterpillar (CAT) led the Dow, up 10% and 9.eight%, respectively. Boeing (BA) , down 12.5%, and JP Morgan Chase (JPM) down 6.2% were the Dow laggards.

Recession worries grow, then ease in quarter

Plus, the economy changed into giving off noises it is able to per chance well be weakening into a recession. (The recession hasn't materialized and would maybe now not occur in any respect.)

So, money changed into pulled from tech stocks and invested someplace else, specifically in stocks with low price-earnings ratios. And just investors looked as if it would favor stocks with predictable dividends as interest rates started to fall upfront of the Fed's Sept. 18 decision to start out cutting interest rates.

The S&P Technology Sector changed into up just 1.Forty four% within the quarter and a pair of.45% in September. The quarterly performance changed into the third-worst of the eleven S&P Five hundred sectors, upfront of Communications Services and products and Energy, weighed down by falling oil prices.

Listed below are the outcomes for the S&P Five hundred for September and the third quarter.

• Consumer Discretionary — Up 7.02% on month; 7.6% for quarter
• Utilities — Up 6.Forty three% on month; 18.46% for quarter
• Communication Services and products — Up 4.Fifty three% on month; 1.4% for quarter
• Industrials — Up three.27% on month; eleven.15% for quarter
• Real Estate — Up 2.77% on month; sixteen.three% for quarter
• Information Technology — Up 2.45% on month; 1.Forty four% for quarter
• Materials — Up 2.Forty one% on month; 9.20% for quarter
• Consumer Staples — Up zero.sixty nine% on month; eight.28% for quarter
• Financials — Down zero.sixty seven% on month; up 10.2% for quarter
• Health Care — Down 1.82% on month; up 5.sixty five% for quarter
• Energy — Down 2.seventy nine% on month; down three.12% for quarter

Listed below are the year-to-date results:

• Information Technology — Up 29.63% year-to-date
• Communication Services and products — Up 27.88%
• Utilities — Up 24.45%
• Financials — Up 20.4%
• Industrials — Up 18.9%
• Consumer Staples — Up sixteen.46%
• Consumer Discretionary — Up 13.21%
• Health Care — Up 12.ninety six%
• Materials — Up 12.sixty two%
• Real Estate — Up eleven.forty eight%
• Energy — Up 5.sixty nine%

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