Wall Street heads into fourth quarter with historic momentum
The final three-month stretch of 2024 is here, and Wall Street is riding high. The S & P 500 closed at a fresh record on Monday, putting the benchmark up 20.8% for the year, excluding dividends. That marks the benchmark’s strongest year-to-date gain through the first three quarters since 1997, the middle of the dot com boom, according to Bespoke Investment Group . Ryan Detrick of the Carson Group pointed out that it’s the best ever nine-month gain for the index during an election year, based on data going back to 1950. The Dow Jones Industrial Average and Nasdaq Composite have also seen strong gains through the first nine months of the year. In 2024, the Dow is up 12.3%, and the Nasdaq has soared 21.2%. .SPX YTD mountain SPX year to date Several catalysts have driven these sharp gains, including excitement over the potential of artificial intelligence to boost corporate profits, along with prospects for easier monetary policy from the Federal Reserve. The Fed last month cut rates by a half percentage point, and traders expect further reductions before year-end. To be sure, investors will have to contend with seasonal pressures in the new month. A CNBC Pro analysis of FactSet data back to 1950 showed October is the most volatile month of the year, with the benchmark averaging a daily move of 1.3% in either direction. Some investors are also hedging their portfolios ahead of what’s likely to prove a contentious U.S. presidential election. RBC head of derivatives strategy Amy Wu Silverman noted her clients are bracing for “3 standard-deviation drawdowns” in coming weeks. “The market is lying awake at night and wondering what bad things could happen. I say that because that demand in hedging has not only picked up more, but you see it in secondary metrics,” such as the Cboe VIX of VIX Index (VVIX) , Wu Silverman told CNBC’s ” Squawk Box .” The VVIX gauges the volatility of the Cboe Volatility Index (VIX) itself — seen by many as Wall Street’s preferred measurement of how much investor fear is in the market. “The worry continues to rise. That … is a very different narrative from the first six months of this year,” Wu Silverman added. Elsewhere on Wall Street this morning, Pivotal Research Group initiated analyst coverage of Alphabet , the parent of Google and YouTube, with a buy rating. “If the status quo holds, GOOG appears to be in a very strong competitive position with a deep moat around their dominant core search business model (~90% market share ex China) and an obvious path to leverage 90%+ (ex China) global device presence (which we believe will dominate consumer AI assistant use), a strong AI platform and financial might to increase financial incentives to handset manufacturers for default AI placement,” Pivotal analyst Jeffrey Wlodarczak wrote.
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