Presented by Mark Gallagher

The August employment report was a major catalyst for the worst weekly performance by the S&P 500 in more than a year. Concerns over slowing growth contributed to cyclicals falling (led by big tech), whereas defensive industries outperformed.

Quick Hits

1. Report releases: The August employment report missed expectations and was downwardly revised for prior months.
2. Financial market data: The poor employment report helped send stocks lower.
3. Looking ahead: The Consumer Price Index (CPI) inflation report comes out this week.

Keep reading for an in-depth look.

Report Releases—September 3–6, 2024

ISM Manufacturing Index: August (Tuesday)

Manufacturer confidence improved modestly despite slowing manufacturing hiring during the month.

-Expected/prior ISM Manufacturing index: 47.5/46.8

-Actual ISM Manufacturing index: 47.2

Trade Balance: July (Wednesday)

The trade deficit widened to its largest level in more than two years. The increase was driven by a 2.1 percent rise in imports during July that outweighed a 0.5 percent increase in exports.

-Expected/prior trade deficit: –$79.0 billion/–$73.0 billion

-Actual trade deficit: –$78.8 billion

ISM Services Index: August (Thursday)

Service sector confidence improved modestly after rising more than expected in July. New orders picked up and hiring growth slowed.

-Expected/prior ISM Services index: 51.4/51.4

-Actual ISM Services index: 51.5

Employment Report: August (Friday)

Hiring accelerated in August; 142,000 jobs were added following a downwardly revised 89,000 in July. The unemployment rate fell from 4.3 percent to 4.2 percent.

-Expected/prior change in nonfarm payrolls: +165,000/–89,000

-Actual change in nonfarm payrolls: +142,000

The Takeaway

-The employment report missed expectations and, when combined with prior downward revisions, gave the market cause for concern with slowing growth expectations.

-The market saw yields fall as it priced in faster rate cut expectations for the Federal Reserve (Fed).

Financial Market Data

Equity

Source: Bloomberg, as of September 6, 2024

U.S. equities fell, with the S&P 500 posting its worst weekly performance since March 2023. The Nasdaq and Russell 2000 lagged the S&P 500 as investors grew concerned that the employment report and other economic data is pointing to a slowdown in growth. Technology led the declines, with other cyclicals also underperforming, including industrial metals, energy, apparel, retail, banks, and cruise lines. Outperformers were primarily defensive sectors, including food and beverage, tobacco, and telecommunications. Airlines also outperformed due to a sell-off in oil; WTI crude fell 8 percent.

Fixed Income

Source: Bloomberg, as of September 6, 2024

Treasury yields fell across the curve as investors priced in a weaker economy and faster rate cut expectations by the Fed. The 2-year dipped below 3.7 percent and the 10-year fell to just 3.75 percent, causing the yield curve to uninvert for the first time since July 2022. Expectations for the Federal Open Market Committee (FOMC) meeting next week are split between cuts of 25 basis points (bps) and 50 bps.

The Takeaway

-The market responded negatively to last week’s poor employment report.

-The Fed has one more major data point coming out this week (CPI) that could affect yields and market sentiment.

Looking Ahead

This week, the focus will be on Wednesday’s CPI report, which will be a critical factor in the FOMC’s decision-making process.

-The August CPI report on Wednesday is expected to show that consumer inflation dropped to 2.6 percent, with core inflation set to remain unchanged at 3.2 percent.

-The August Producer Price Index (PPI) report on Thursday is expected to show signs of softening, with year-over-year price growth set to slow from 2.2 percent to 1.8 percent.

-On Friday, the preliminary University of Michigan consumer sentiment survey for September is expected to show modest improvements.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher

Quick Hits

1. Solid Month for Stocks

Stock returns were positive in August despite an early month sell-off.

2. Bonds Continue to Rise

Falling interest rates led to positive bond returns for the fourth consecutive month.

3. Interest Rate Cuts Ahead

Investor expectations for rate cuts rose during the month.

4. Continued Economic Growth

Economic updates released during the month showed signs of continued growth.

5. Risks to Monitor

Markets face a variety of risks as we finish the third quarter.

6. Positive Outlook for Markets and the Economy

Markets and the economy set for continued growth in the months ahead.

Solid Month for Stocks

August was an encouraging month for stocks, as markets ended the month in positive territory despite a brief sell-off at the start of the month. The S&P 500 gained 2.43 percent while the Dow Jones Industrial Average managed a 2.03 percent return. The technology-heavy Nasdaq Composite index lagged its peers but ended the month up 0.74 percent.

These solid results coincided with improving fundamentals. Per Bloomberg Intelligence, as of August 29 with 99 percent of companies having reported earnings, the average earnings growth rate for the S&P 500 in the second quarter was 13.97 percent. This is well above analyst estimates at the start of earnings season for an 8.34 percent increase and highlights the continued health of company fundamentals. Over the long run, fundamentals drive market performance, so the better-than-expected earnings growth is a positive development for investors.

Technical factors were supportive as well during the month. All three major U.S. indices spent the entire period well above their respective 200-day moving averages. (The 200-day moving average is a widely followed technical indicator, as sustained breaks above or below this level can signal shifting investor sentiment for an index.) The continued technical support in August was another encouraging development for investors during the month.

The story was similar for international stocks as well. The MSCI EAFE index gained 3.25 percent for the month while the MSCI Emerging Markets index was up 1.65 percent. Both of these international indices also spent the entire month well above their respective 200-day moving averages.

Bonds Continue to Rise

It was another solid month for fixed income investors, as falling interest rates led to rising bond prices. The 10-year Treasury yield fell from 4.09 percent at the start of August to 3.91 percent by month-end. The Bloomberg U.S. Aggregate Bond index was up 1.65 percent during the month.

High-yield bonds also had a positive August, as the Bloomberg U.S. Corporate High Yield index gained 1.44 percent. High-yield spreads spiked at the start of the month, hitting a 2024 high of nearly 4 percent,  before falling to end the month at 3.15 percent.

Interest Rate Cuts Ahead

The falling rates in August was primarily due to rising investor expectations for interest rate cuts at the upcoming Federal Reserve meetings in September, November, and December. We entered the month with futures markets pricing in three 25 basis point interest rate cuts through the end of the year; however by month-end, these forecasts had increased to four cuts. Fed chair Jerome Powell announced at the annual Jackson Hole central bank retreat that the time has now come for lower interest rates, which was widely expected by economists and welcomed by markets.

This announcement near month-end helped drive the rising calls for rate cuts at the upcoming Fed meetings. While it’s too early to rely on cuts at the November and December meetings, a rate cut in September now appears to be locked in given the recent updates that we’ve seen on inflation
and employment.

Speaking of employment, as you can see in Figure 1, the pace of hiring has slowed over the past few months, with July’s 114,000 job additions coming in well below economist estimates. Given the progress that we’ve seen in getting inflation back down near the Fed’s 2 percent target, employment data will be a key factor when the central bankers set monetary policy in the months ahead.

Figure 1: All Employees, Total Nonfarm, Change Period to Period

Source: Bureau of Labor Statistics/Haver Analytics, August 2, 2024.

The Takeaway

-Market expectations for rate cuts increased during the month.

-Slowing hiring in July could be a sign of potential weakness for the labor market.

Continued Economic Growth

The economic data releases in August showed signs of continued economic growth. The revised second-quarter GDP report showed that the annualized pace of economic growth rose from 1.4 percent in the first quarter to 3.0 percent in the second quarter, up from advanced estimates for a more modest 2.8 percent growth rate. This result was well above economist estimates and was driven by higher personal consumption growth, which was revised up from an annualized rate of 2.3 percent to 2.8 percent in the second quarter.

Consumer spending remained robust in July, as personal spending and retail sales growth both accelerated during the month. The 1 percent rise in headline retail sales in July was especially encouraging following a downwardly revised 0.2 percent drop in sales in June and signaled continued consumer demand. A rebound in auto sales in July brought the pace of overall sales to its fastest level in more than a year, highlighting the impressive resilience for consumer spending in July. Given the importance of consumer spending on the overall economy, these updates were certainly
welcome developments.

Business spending also showed signs of improvement during the month, as durable goods orders surged by 9.9 percent in July. While this was primarily due to a notable rise in volatile non-defense aircraft orders, the rebound in sales was still well above economist estimates and a good sign for overall
business spending.

The Takeaway

-August’s economic data releases showed signs of continued economic growth.

-GDP growth accelerated in the second quarter.

-Consumer and business spending rebounded in July.

Risks to Monitor  

While inflation has improved in recent months, it still remains a pressing risk for markets and the economy. Additionally, given the recent slowdown in hiring and the Fed’s dual mandate to promote stable prices and maximum employment, the job market is increasingly becoming a risk for markets. The rising expectations for rate cuts in August were largely due to expectations for a slowing economy ahead, especially for jobs and inflation. While lower inflation and slower hiring are expected in the months ahead, these results are not guaranteed, and surprises to this outlook could rattle markets.

August also highlighted the large level of political uncertainty that we face here in the U.S. This uncertainty is expected to increase as we approach the elections in November.

International risks remain as well, as seen by the expanding conflicts in Ukraine and the Middle East as well as the continued economic slowdown in China. While the direct market impact of these international risks has been limited so far, there is a lot going on internationally that we should be paying attention to.

The Takeaway

-Inflation and the jobs market remain the primary domestic risks for markets.

-Election-related uncertainty is expected to pick up as we approach the November elections.

-International risks could also negatively impact markets.

Positive Outlook for Markets and the Economy

While there are certainly real risks that investors should be aware of, on the whole, we remain in a good place as we finish off the summer and head into the fall. Markets have shown impressive resilience throughout the year and the economic backdrop remains solid. Market fundamentals show continued signs of healthy growth, which is a good sign for long-term investors.

Interest rates have often served as a headwind for investors over the past few years; however, Powell’s announcement at Jackson Hole indicates that it may be time for this headwind to transition into a tailwind. While we may certainly face short-term setbacks along the way, the most likely path forward for the economy and markets is further growth and appreciation ahead. Given the potential for setbacks, a well-diversified portfolio that matches investor goals and timelines remains the best path forward for most. If concerns remain, you should speak to your financial advisor to go over your financial plans.

Disclosure: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets. All indices are unmanaged and investors cannot invest directly into an index. The Dow Jones Industrial Average is a price-weighted average of 30 actively traded blue-chip stocks. The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. It excludes closed markets and those shares in otherwise free markets that are not purchasable by foreigners. The Bloomberg Aggregate Bond Index is an unmanaged market value-weighted index representing securities that are SEC-registered, taxable, and dollar-denominated. It covers the U.S. investment-grade fixed-rate bond market, with index components for a combination of the Bloomberg government and corporate securities, mortgage-backed pass-through securities, and asset-backed securities. The Bloomberg U.S. Corporate High Yield Index covers the USD-denominated, non-investment-grade, fixed-rate, taxable corporate bond market. Securities are classified as high-yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below. 

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher

Small-caps continued their rebound as market breadth widened. Treasuries traded in a relatively tight range as investors awaited Federal Reserve (Fed) Chair Jerome Powell’s comments on Friday morning.

Quick Hits

1. Report releases: The pace of existing home sales picked up modestly in July.
2. Financial market data: Small-caps continued their rebound amid widening market breadth.
3. Looking ahead: This week’s data will focus on durable goods orders, consumer confidence, and personal spending.

Report Releases—August 19–23, 2024

Federal Open Market Committee (FOMC) Meeting Minutes: July (Wednesday)

Although the Fed voted to leave interest rates unchanged after meeting in July, minutes from the meeting showed that several central bank members viewed a rate cut as potentially appropriate.

Preliminary S&P Global US Composite PMI: August (Thursday)

The Preliminary S&P Global US Composite PMI was better than expected. The services sector was at 55.2, versus expectations of 54.2, whereas the manufacturing sector was softer than anticipated at 48 versus an expectation of 49.5.

-Expected composite PMI/prior month composite PMI: 53.0/–54.3

-Actual composite PMI: 54.1

Existing Home Sales: July (Thursday)
The pace of existing home sales increased for the first time in five months.

-Expected/prior month existing home sales change: +1.3%/–5.1%

-Actual existing home sales change: +1.3%

New Home Sales: July (Friday)

New home sales picked up considerably after the 30-year fixed mortgage rate fell from 7.07 percent in June to 6.78 percent by the end of July. Despite the 10.6 percent month-over-month increase, the 739,000 new homes sold was only 9,000 greater than the 730,000 new homes sold in April.

-Expected/prior month new home sales change: +0.8%/–0.6%

-Actual new home sales change: +10.6%

The Takeaway

-FOMC members expressed varied opinions about cutting rates at their July meeting.

-Home sales rebounded as the 30-year fixed mortgage rate fell 29 basis points (bps).

Financial Market Data

Equity

Source: Bloomberg, as of August 23, 2024

U.S. equities moved higher, with the Russell 2000 Index leading the way. The market has widened in breadth after experiencing a sell-off in early August; more than 70 percent of firms in the S&P 500 ended the week above their 50-day moving average. The top performing sectors were real estate, materials, and consumer discretionary. Underperforming sectors were energy, technology, and communication services.

Fixed Income

Source: Bloomberg, as of August 23, 2024

Treasuries traded in a relatively tight range as market participants awaited Powell’s comments on Friday. Treasuries were higher in price and lower in yield. Shorter maturities outperformed, steepening the yield curve. The 10-year lost 8 bps, falling to 3.8 percent.

The Takeaway

-Small-caps continued their rebound amid widening market breadth.

-Bonds were relatively unchanged, other than a move lower on the shorter end of the curve.

Looking Ahead

This week’s data will focus on durable goods orders, consumer confidence, and personal spending.

-The week kicks off on Monday with the preliminary release of durable goods orders for July. Headline durable goods orders are set to partially rebound after falling more than expected in June. Core orders are expected to remain flat.

-On Tuesday, the Conference Board Consumer Confidence Index for August will be released. Confidence is expected to fall modestly.

-On Thursday, we expect the second revision release of second quarter GDP growth, which is expected to remain at 2.8 percent on an annualized basis.

-Finally, on Friday, the personal income and spending report for July is due. Both are expected to rise, which would mark 16 consecutive months of personal spending growth.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network

Presented by Mark Gallagher

Equities recovered after a two-day sell-off amid a Japanese carry trade scare. Bonds gave back much of their gains, as investors returned to risk assets later in the week.

Quick Hits

1. Report releases: Service sector confidence improved more than expected in July.
2. Financial market data: Equities recouped losses amid a Japanese carry trade scare.
3. Looking ahead: This week will be busy on the data front, with inflation, retail sales, and consumer sentiment all expected.

Report Releases—August 5–9, 2024

S&P Global U.S. Composite Purchasing Managers’ Index (PMI): July (Monday)

The U.S. Composite PMI fell to 54.3, down from 55.0. The services sector led the move as its PMI fell from 56.0 to 55.0. Manufacturing fared better, increasing to 49.6 from 49.5, but still in
contractionary territory.

-Prior U.S. Composite PMI: 55.0

-Actual U.S. Composite PMI: 54.3

Institute for Supply Management (ISM) Services: July (Monday)

Confidence in the services sector rebounded sharply in July after briefly falling into contractionary territory in June.

-Expected/prior ISM services index: 51.0%/48.8%

-Actual ISM services index: 51.4%

Trade Balance: June (Tuesday)
The trade deficit fell less than expected in June. Despite the miss against expectations, this represents the smallest monthly deficit in three months.

-Expected/prior trade deficit: –$72.5 billion/–$75.0 billion

-Actual trade deficit: –$73.1 billion

Richmond Federal Reserve (Fed) President Tom Barkin (Thursday)

Despite the volatility in rates recently, Richmond Fed President Tom Barkin said the central bank has time to assess whether the economy is normalizing or if it’s softening. He noted risks to both sides of the Fed’s mandate but was optimistic on broadening disinflation.

The Takeaway

-Services showed conflicting data in July, with ISM showing strength and PMI showing weakness.

-The Fed remains optimistic about continued broadening disinflation.

Financial Market Data

Equity

Source: Bloomberg, as of August 9, 2024

U.S. equities were down on the week, although recovered from a major sell-off on Monday. International markets fared a bit better. Monday’s sell-off is thought to be due to an unwinding in the Japanese yen carry trade that has been in place for an extended period. Those participating in the trade had historically borrowed at a very low cost due to Japan’s low interest rate policy and invested elsewhere. This went awry recently, as Japan recently hiked rates and central banks such as the U.S. Fed left their rates unchanged. This led to a strengthening Japanese yen, which offset any gains from borrowing at low rates.

Fixed Income

Source: Bloomberg, as of August 9, 2024

The yield curve reversed much of its move from last Friday and Monday as the belly of the curve plunged, as investors looked to lock in elevated short- to intermediate-term rates amid concerns in risk assets. The U.S. 5-year treasury finished up by 18 basis points (bps) to close the week at 3.8 percent.

The Takeaway

-Equities recovered from the sharp sell-off at the start of the week, as Japanese carry trade
fears eased.

-Bonds gave back much of their gains from Friday and Monday, as investors returned to risk assets and yields rose.

Looking Ahead

This week will be busy on the economic front. The focus will be on inflation, retail sales, and
consumer sentiment.

-The week kicks off on Tuesday with the release of the Producer Price Index for July. Producer prices are set to rise 0.2 percent in July, which would be in line with June’s increase.

-On Wednesday, we expect to see the release of the Consumer Price Index for July. Year-over-year consumer inflation is expected to remain flat at 3.0 percent following a larger-than-expected slowdown in June.

-July retail sales will highlight Thursday’s data. Retail sales are set to rise by 0.3 percent in July after coming in flat in June. Core sales are set to show a more modest 0.2 percent increase.

-Finally, on Friday the Preliminary University of Michigan Consumer Sentiment Survey for August will be released. The first look at consumer sentiment in August is expected to show modest improvements during the month.

Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2024 Commonwealth Financial Network