May 2024 Market Review Trajan Wealth

PHOENIX - June 24, 2024 - PRLog -- Trajan Wealth's chief investment officer, Udayan Mitra, CFA, analyzes May's financial market. Read the full review.

May 2024 Market Review

• Strong Q1 2024 US earnings eased fears of economic cooling due to higher borrowing costs. Fed Chairman Jerome Powell's conciliatory language following the May 1st FOMC meeting reassured markets of potential rate cuts, leading to a sharp rebound in global markets. YTD returns on US equities range from 3.32% in small and mid-cap stocks to 11.82% in the NASDAQ. Bond returns are recovering as yields trend lower with the Fed's dovish stance.
  
  
• Corporate earnings, especially in AI-related sectors, are driving strong performance in large-cap stocks. NVIDIA Corp.'s stock is up 141% YTD, driven by significant revenue and EPS growth. Big Tech companies like Microsoft, Meta, Alphabet, and Amazon have also posted strong returns. However, market performance remains concentrated in a few stocks.
  
  
• The high valuation of the S&P 500, with a P/E ratio above 25x, is significantly higher than the long-term average of 19x. Valuations depend on interest rates and inflation expectations, with future bond yields impacting stock performance.
  
  
• US non-farm productivity is rising, driven by AI, data science, and robotics advancements, boosting EPS growth. However, aging demographics pose challenges, with an increasing dependency ratio and funding issues for Medicare and Social Security, potentially leading to higher taxes or borrowing.

• For eligible clients, we recommend calculated allocations to private assets—including equity, commercial real estate, infrastructure, and credit—to capture illiquidity premiums and potential manager "alpha" from skill, access, and club-deal networks. Interested clients and prospects can call our Portfolio Management Group at 1 (800) 799-3320.
  
  
• We continue to advocate elevated diversification across asset classes and develop specific asset allocation perimeters that cater to individual risk-tolerance thresholds. Consider saving and investing a greater proportion of disposable income.