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July 2024 Market Commentary

By: Sean T. Corkery, CFA, Chief Investment Officer / 10 Jul 2024
Man pointing at financial charts with pen.

Millennials are Making Their Mark

  • The S&P 500 Index's remarkable run continues, led by a familiar short list of stocks.
  • Millennials are flexing their trading muscles, posting wonderful gains.
  • The newest chapter of thematic investing, artificial intelligence, is driving the stock market to all-time highs.
  • An economic warning sign emerges, testing investors' conviction.



June 2024




1-Year (%)

3-Year Annualized (%)

S&P 500 Index





Dow Jones Industrial Average





NASDAQ Composite Index





Russell 2000 Index





MSCI All Country World Index (ex U.S.)





MSCI Emerging Markets Index





U.S. Aggregate Bond Index





Monthly returns were mixed in June with the NASDAQ Composite Index posting a solid 6% return, while U.S. Small Caps and non-U.S. markets declined. S&P 500 sector returns were mixed too, with 5 of the 11 sectors advancing. After a robust May (up 9%), the Utilities sector reversed course, declining 6%. The best performing sectors in June were Technology (up 8%), Consumer Discretionary (3%) and Communications Services (3%).

 "Almost any asset can be risky or safe, depending on how other investors treat it."

-Howard Marks


Wealth Accumulation Accelerates

The S&P 500 Index closed out the first half of the year on a high note, gaining 3.6% in June. Over the last eight months, the index gained 32%, creating more than $11 trillion in value for shareholders. For perspective, the eight-month surge in valuation is equal to the second largest stock market in the world (by country), China.

Comparing the bellwether index's recent robust performance to the average annual return of 11% over the last 75 years reveals an anomaly. Remarkably, in four of the last six years, the S&P 500 Index achieved at least a 15% total return in the first half of the year. However, from 1999 to 2018, the index never reached a 15% first-half return. The market returns suggest the wealth accumulation experience varies significantly across investor generations. The current generation achieved an impressive 17.2% annualized return over the past five and a half years, while the prior generation managed only a 5.6% annualized return over two decades. In just 5.5 years, today's S&P 500 Index investor turned a $100,000 investment into $240,000, whereas the previous generation needed 16 years to achieve similar results.


Move over Buffett, Here Comes the Millennials

An Investor's Business Daily analysis of data from last year's Apex Next Investor Outlook and S&P Global Market Intelligence concluded that "Millennials are in the driver's seat when it comes to trading.[i] During the fourth quarter of 2022, Millennials, aged 26 to 41, triggered nearly 56 million trades. It was nearly 1.5 times the trades made by Generation X (aged 42 to 57), and six times greater than trades made by Generation Z (aged 25 and younger). In addition, while aggregate assets for all generations have risen 16% to $52.4 trillion over the past few years, Millennials and Generation Z investors are gaining wealth at a rate of 25%.

The analysis showed that despite the S&P 500 Index's big drop in 2022, investors of all generations held onto stocks. Four out of five accounts had no trades at all in the fourth quarter. 40% of the Millennials' accounts only had buy transactions.  The top holding in Millennials' accounts was Tesla. The other top holdings are below:

A screenshot of a computer Description automatically generated

The returns are as of February 23, 2023. While 2022 was a trying year, since the end of 2022 Millennials crushed the S&P 500 Index. The average return of their top holdings is 175% vs a 48% S&P 500 Index return. If we exclude the top (NVDA 773%) and bottom (AMC -88%) performers, the average return is 133%. The impressive results implies that a new generation of stock market champions emerged.


Same Story, Different Month

Once again, a small subset of stocks was responsible for most of the index's tremendous gains in the first half of 2024. Just ten stocks accounted for 73% of the S&P 500 Index's year-to-date gains, with one, Nvidia, contributing 33% of the gains. 

A blue and green card with different colored squares Description automatically generated[ii]

A keen-eyed observer may surmise that there is a correlation between Millennials' trading activity and the concentrated leadership of the stock market. Of little importance is the "rest of the S&P 500 Index". The vast majority of stocks barely contributed to the market's gains over the last couple of years. Investors may be following the old adage: "if it ain't broke, don't fix it". By sticking with a handful of stocks, investors enjoyed handsome gains.


What's Old is New Again

The phenomenon of "concentrated bets" is nothing new. As highlighted in this week's Barron's, every decade has its own set of champions that have dominated the market.[iii] Automobiles were market champions from the 1920s to the 1960s, oil companies ruled the 1980s, and technology stocks led the way during the dot-com boom of the 1990s. However, few companies or industries are able to retain their top-dog status in the face of innovation. Today's leaders, the so-called Magnificent Seven stocks, are artificial intelligence innovators. Remarkably, some Magnificent Seven members didn't exist during the dot-com boom. There was no Google or Facebook, and Amazon was just a seller of books and compact discs. As noted in the article, "the lesson is that today's market champions don't often dominate the future."

An Eye on Earnings

The earnings season kicks off this week with JPMorgan, PepsiCo, Wells Fargo, and Citigroup scheduled to report second quarter results. The three mega cap bank stocks have outperformed the S&P 500 Index this year, while the snack and soft drink stock has woefully underperformed. Interestingly, analysts expect the same level of year-over-year earnings per share growth (2% to 3%) across the four companies. For the S&P 500 Index, analysts expect 8.8% year-over-year growth, with double-digit growth coming from the Communications Services, Health Care, Technology and Energy sectors. Consumer Staples, Industrials and Materials sectors are expected to report negative year-over-year growth.


Analysts have tempered their earnings growth estimates over the last three-months. The U.S. Earnings Revisions Index tracked by Citigroup has swung back into negative territory, as depicted below.