Market Waves: The Highs and Lows of Summer ‘24

Those who have been following the stock market this past summer have seen volatility in its truest form. The fluctuation was due to a variety of global, economic and political factors. 

Overall, June proved to be a satisfactory month in terms of stock market returns, with most segments producing positive year-to-date returns. However, this trend was not consistent between large-cap stocks (firms valued well over $10 billion) and small-cap stocks (firms valued somewhere between $300 million and $2 billion). This can be seen by the S&P 500 index, which tracks large cap stops, had a return of over 15% YTD in June, while the Russell 2000 index, which tracks smaller cap stops, had only a 1.7% YTD return in June. Specifically, the equities market saw a boom in the tech sector, with AI companies leading the pack. The most notable of these companies is Nvidia, which supplies chips essential for running AI models and even surpassed Microsoft as the largest publicly-listed American company that month. 

Major global events occurred as well, particularly the Canadian Central Bank cutting interest rates, which would mark the first of the G7 — the international forum of seven of the world's largest economies, including Canada, France, Germany, Italy, Japan, the U.K. and the United States — to do so. To date, around 20 countries worldwide have cut interest rates, and it is only a matter of time until the U.S. follows suit.

June also witnessed the first and only presidential debate between President Trump and President Biden. After Biden’s underwhelming performance and Trump’s witty, on-the-ball comebacks, many Wall Street investors foresaw a Trump victory. A Trump win would benefit the U.S. economy due to his free market oriented policies, specifically his intention to cut corporate taxes. Wall Street’s forecasted Trump victory appeared to boost the stock market in real time as “stock futures extended gains as the debate progressed,” according to Reuters.

Without a doubt, the month of July 2024 will be remembered as a dark point in our history due to the assassination attempt on former President Trump. This not only impacted the political landscape but the economic sphere as well. Investors believed Trump surviving the assassination attempt would help him win the presidency, again a win for Wall Street. Following the assassination attempt, the U.S. stock market rallied. In particular, Trump Media and Technology Group increased by a jaw-dropping 50%, Bitcoin and Tesla both by 4%, and the GEO Group — a private company that operates prisons, detention centers, and community reentry facilities — by about 7%. The combination of Trump’s strong debate performance and the assassination attempt, both of which boosted his campaign, led to positive returns in the market

As we welcomed in the month of August, the world was introduced to a slight, but scary crash in the market. All three major U.S. indexes fell more than 2.5%, with the Dow Jones Industrial Average dropping over 1000 points. Its effect was seen worldwide, most seriously in Japan where the Nikkei 225 index, which measures the performance of the Japanese stock market, dropped by an upward of 12%. A domino effect occurred and we witnessed losses across Europe and the U.S. due to investors dropping riskier assets. Even Nvidia, which was the front-runner in June, fell by at least 4%. 

This downward trend in the market can be attributed to the U.S. presidential race. In the transition from July to August, U.S. citizens witnessed a transition in the Democratic primary nominee, as Kamala Harris became the de facto candidate after Biden dropped out of the race. As support for Harris gained traction, likely due to her honeymoon phase, investors are now seeing a Harris victory as possible, which could usher in far-left policies that can significantly hurt the economy. President Trump even dubbed this incident as the “Kamala Krash,” pinning the blame on her. Of course, there is no real evidence to back up the claim, only mere speculation. 

As the summer of 2024 winds down, we look back at the volatility of the stock market, which can be attributed to a variety of global events as well as political events here at home. As there is still a long time until polls open in November, this unprecedented election cycle will most likely continue to produce ripple effects in the stock market.

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Photo Caption: The stock market has had a tumultuous summer amidst political instability.

Photo Credit: Torsten Asmus / iStock