Closing the Gap
Stocks continued to advance in the third quarter, albeit with more volatility than experienced during the first half of 2024. Some of the market’s zigs and zags were driven by economic data, which appeared to be signaling a slowdown in the US economy. These concerns came to a head in early August, resulting in equities experiencing their biggest volatility spike since 2022 (as measured by the VIX Index of S&P 500 volatility), amidst a short-but-sharp 8.5% pullback for the S&P 500. Within a few weeks, markets had calmed down, and the Federal Reserve’s September 18 announcement of a relatively aggressive .5% interest-rate cut made investors more optimistic that the economy would be able to sidestep a recession.
