Fortis Wealth Management

(888) 336-7847 (3FORTIS)

www.investfortis.com

October 2024
Market Update
(all values as of 09.30.2025)

Stock Indices:

Dow Jones 46,397
S&P 500 6,688
Nasdaq 22,660

Bond Sector Yields:

2 Yr Treasury 3.60%
10 Yr Treasury 4.16%
10 Yr Municipal 2.92%
High Yield 6.56%

YTD Market Returns:

Dow Jones 9.06%
S&P 500 13.72%
Nasdaq 17.34%
MSCI-EAFE 22.34%
MSCI-Europe 24.64%
MSCI-Pacific 17.97%
MSCI-Emg Mkt 25.16%
 
US Agg Bond 6.13%
US Corp Bond 6.88%
US Gov’t Bond 5.93%

Commodity Prices:

Gold 3,882
Silver 46.77
Oil (WTI) 62.52

Currencies:

Dollar / Euro 1.17
Dollar / Pound 1.34
Yen / Dollar 148.71
Canadian /Dollar 0.71
 

Macro Overview

Uncertainty among global markets rose as conflict in the Middle East elevated tensions and roiled energy markets. Oil and fuel prices spiked as the threat of supply constraints and the disruption of shipping routes imposed duress on an already-fragile environment.

The aftermath of Hurricane Helene is estimated to result in roughly $34 billion in losses, after dumping a staggering 42 trillion gallons of rainfall and becoming one of the most destructive hurricanes on record. The massive destruction of homes, businesses and coastal areas is expected to possibly take years to repair and revitalize. The Federal Emergency Management Agency (FEMA), which has already been stretched thin by record-setting wildfires and other extreme weather events, has warned that the agency doesn’t have enough funding to make it through the 2024 hurricane season.

The port workers strike affected every port and major maritime trade gateway from Boston to Houston, where billions of dollars of imported and exported products flow. Economists believe that the damage from the supply-chain disruption may be widespread, especially hindering the nation’s retail sector. Union workers voted on postponing the strike and resuming work until January 15th, in order to allow for negotiations between employers and the International Longshoremen’s Association union.

A price war has emerged among restaurants and the fast-food industry for increasingly cost-conscious consumers, with promotions on popular menu items in order to increase sales. Consumers have been cutting back and avoiding pricy restaurants and food items as budgets tighten up. The results of increasing promotional activity and cost-conscious consumers are considered to be deflationary.

The Federal Reserve reduced its key rate, the Fed Funds Rate by half of a percent to 4.75% – 5.00%, from 5.25% – 5.50%. It was the first rate cut by the Fed since March 2020, during the onset of the pandemic. The Fed made it clear that it was not easing rates because of a crisis as it did in 2020, but rather to counter growing weakness in the labor market.

The initial rate cut by the Fed received a lukewarm response by domestic and international equity markets, as the Fed announced that rate cuts such as the initial reduction should not be expected to continue at generous as it was. The Fed’s reduction immediately affected consumer interest rates from mortgages to auto loans. The Fed can only control short term rates, while the fixed income market dictates intermediate and long term maturities. Mortgage rates fell to their lowest levels in over a year in September.

Insurance premiums are expected to rise further in the wake of the damage caused by Hurricane Helene, prompting some homeowners to sell or relocate because of unaffordable
insurance. The insurance industry is on edge as rising claims progress as a result of the unpredictable hurricane season.

The tremendous demand for energy driven in part by Artificial Intelligence (A.I.) has, for the first time in decades, garnered support to reopen and expand existing nuclear facilities, including the infamous Three Mile Island nuclear plant in Pennsylvania. (Sources: Federal Reserve, Treasury Dept., FEMA, Bloomberg, Dept. of Energy)

 

 

 
total stock exchange volume now exceeds 5 billion shares per day

Stocks Remain Resilient In September – Domestic Equity Overview

Domestic equity indices bounced upward in September, defying notions that the month has been a historically difficult month for stocks. The Fed’s greater-than-expected rate cut prompted a rise in equities for small-, mid- and large- capitalization companies, which saw their borrowing costs decline. The Dow Jones Industrial Index, the S&P 500 Index, and the Nasdaq Index all posted advances for the month of September.

The Securities & Exchange Commission (SEC) approved the pricing of stocks and ETFs traded on exchanges to be quoted in half-penny increments. The change allows for enhanced efficiency for pricing actively traded stocks and ETFs, which currently trade an average of 5 to 6 billion shares per day. (Sources: Securities & Exchange Commission, Dow Jones, S&P, Nasdaq)

Rates Hesitate To Fall Further – Fixed Income Overview

Bonds reacted cautiously to the Fed’s initial rate reduction, anticipating that the Fed may not reduce rates as quickly as hoped. The yield on the 10-year Treasury ended September at 3.81%, not much lower than where it ended the previous month at 3.91%. Yet numerous analysts and economists believe that growing uncertainty regarding the economy, hurricane losses, the Middle East conflict, and the election may lead to a gradually evolving lower-rate environment.

The Fed signaled that it may move slower with future rate reductions should the employment market show continued resiliency. Recent developments such as the effects of the port strike and aftermath of Hurricane Helene may impose new challenges and duress for hundreds of thousands of individuals and businesses directly affected by the storm, indirectly affecting millions across the country as disrupted supply chains may impact prices. (Sources: Treasury Dept., Federal Reserve)

More Workers Think They’ll Be Unemployed – Labor Market Update

Primary objectives of the Federal Reserve include securing the value of the dollar by limiting inflation, and maintaining a healthy and robust labor market by encouraging employers to hire and workers to find favorable positions. Workers’ expectations of their future job prospects is closely tracked by Federal Reserve economists. Such data gives the Fed insight as to where the labor market might be headed. The most recent data released reveals that a growing number of workers expect to become unemployed in the next few months, a record high since 2014.

The recent data indicates that more workers are becoming unhappy with their current jobs and transitioning more frequently between jobs. Workers nearing retirement are inclined to work longer and foregoing retirement until later years. Economists and the Fed believe that lingering inflationary pressures have imposed additional burdens on employees, requiring them to work longer due to heightened living costs. (Source: Federal Reserve)

 

 
Fed Funds Rate fell from 2.00% in 2019 to 0.0% in March 2020

Nuclear Power Generation Expected To Increase As A.I. Requires More Energy – Energy Industry Overview

The tremendous adoption of Artificial Intelligence (A.I.) has brought about an enormous increase in the demand for energy. A.I. employs a multitude of electronic components that consume enormous amounts of electricity and generating vast amounts of heat. Expanded use of air conditioners and temperature-controlling equipment is also consuming energy past levels seen in the past.

Natural gas powered stations and nuclear fueled generation facilities are becoming the most viable sources of energy to meet the rapid expansion of A.I.

The infamous Three Mile Island nuclear reactor in Pennsylvania, is scheduled to reopen in 2028 under a 20-year contract to power new and expanding data centers. Numerous other facilities across the country are also undergoing upgrades and expansions in preparation for increased power demand and growing revenues.

Sources: Dept. of Energy, Office of Nuclear Energy

Fed Funds Rate History

The Federal Reserve attempts to address inflation and the employment market by increasing and decreasing short term rates with the Fed Funds rate, but long-term rates are determined by the enormous fixed income market, which essentially determines nearly all other bond maturity prices and yields. Some analysts and economists believe that the Fed may be transitioning back to historical Fed Fund rates in the range of 2.00% – 3.00%, which is where rates hovered before the Covid-19 outbreak.

During the pandemic, the Federal Reserve shifted into crisis mode as millions of Americans weren’t working, businesses shuttered, and economic growth reversed into economic contraction. The Fed Funds rate fell from 2.00% in 2019 to 0.0% in March 2020 in order to provide critical liquidity and attainable consumer loan rates to fortify the financial system.

The rapid increase in the Fed Funds Rate during the post pandemic environment was meant to mitigate inflationary pressures and to protect the value of the U.S. dollar. The question that financial markets and businesses face now is how low will the Fed take the Fed Funds Rate, and how long will it take until it finds the optimal rate range.

Source: Federal Reserve Bank of New York

 
average rate on a 30 year fixed mortgage fell to 6.08% in September

Mortgage Rates Starting To Fall – Housing Market Overview

With the Federal Reserve’s initial rate cut this past month, interest rates on consumer loans from automobiles to credit cards began to see a decrease. Mortgage interest rates have a significant impact on the housing market and homebuyers across the country, and mortgage rates fell to a 12 month low following the Fed’s rate reduction in September. The average rate on a 30-year fixed mortgage fell to 6.08% at the end of September, down from 7.79% in October 2023.

 

 

Even though mortgage rates have been falling, the current home turnover rate is at its lowest in 30 years, with roughly 25 of every 1000 homes being sold or bought so far this year. The lack of inventory nationwide has added to already tight supplies and limited new construction. Certain geographic regions, including Florida and parts of the Southeast, are starting to see a pullback in values as the cost of insurance becomes unaffordable for many homeowners.

The average 30-year fixed mortgage rate for the past 53 years is 7.72%, which is where the average rate was in the third quarter of 2023. Homeowners and homebuyers are watching how much lower mortgage rates could fall as the Fed gradually decreases the Fed Funds Rate. Even at current levels, rates are below the 53 year average.

As mortgage rates have fluctuated over the past 53 years, so have home prices. The average U.S. home in 1971 was valued at roughly $25,000, whereas the average home price was $412,300 in the second quarter of 2024.

As rates have risen, homes have become vastly unaffordable for millions of Americans due to increased monthly mortgage payments, restricting many from becoming first time homeowners or moving. There remains tremendous hesitation among millions of homeowners that currently hold historically low fixed mortgage rates, a benefit that would be lost if they sold their house.

Sources: FreddieMac, https://www.redfin.com/news/home-sales-turnover-2024/, Federal Reserve

 

 

Market Returns: All data is indicative of total return which includes capital gain/loss and reinvested dividends for noted period. Index data sources; MSCI, DJ-UBSCI, WTI, IDC, S&P. The information provided is believed to be reliable, but its accuracy or completeness is not warranted. This material is not intended as an offer or solicitation for the purchase or sale of any stock, bond, mutual fund, or any other financial instrument. The views and strategies discussed herein may not be appropriate and/or suitable for all investors. This material is meant solely for informational purposes, and is not intended to suffice as any type of accounting, legal, tax, or estate planning advice. Any and all forecasts mentioned are for illustrative purposes only and should not be interpreted as investment recommendations.