Market Commentary: Bird’s Eye View for Q3 2024

It might surprise you that the seven largest Japanese stocks have outperformed the “Magnificent Seven” of the U.S. stock market over the past three years, partly thanks to lower starting valuations in Japan.

The future promise of AI has captured investors’ imagination, but it’s a mistake to think AI is the only place to be or that high valuations don’t matter, explains EverNest Managing Partner Frank J. Esposito in his just published 5-minute video market update.

Watch the video for thoughts on:

• Growth stocks have dramatically outperformed value stocks.
• Small-cap stocks bear watching. Historically, when large companies have struggled (e.g., for the 10-year period following the collapse of the tech bubble in the early 2000s), small-cap companies have outperformed.
• Interest rates are largely unchanged from a quarter ago, and there’s good news on the inflation front, where levels have continued to come down and drivers have shifted away from basic inputs.
• Economic indicators have weakened. That could indicate a mid-cycle slowdown. Or, further weakening could eventually lead to recession.

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An index is an unmanaged portfolio of specific securities, the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown.

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S&P 500 Index – a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies.

Russell 3000 – The index measures the performance of the largest 3000 US companies representing approximately 98% of the investable US equity market. It is market-capitalization weighted.

S&P Small-Cap 600 – measures the performance of the small-cap segment of the U.S. equity market. It includes market capitalizations of between $450 million and $2.1 billion.

MSCI Emerging Markets Index – a free-float-adjusted market-capitalization-weighted index that is designed to measure the equity market performance of emerging markets. The MSCI Emerging Markets Index consists of 23 emerging markets country indexes.

MSCI Europe Index – captures large and mid-cap representation across 15 Developed Markets (DM) countries in Europe.