Stocks Are “Back in Black”… But Will They Stay There?

Joe Hill|August 28, 2024

I got nine lives
Cat’s eyes
Abusin’ every one of them and running wild
‘Cause I’m back…

– AC/DC, “Back in Black”

That’s right, folks. We are BACK.

Or rather, the markets are.

After kicking off August with a historic drop, the S&P 500 is now up more than a full percentage point from where it stood before the chaos.

Back in black, baby!

The recent drop was par for the course in 2024. In January, Shah predicted the year would be as gainful as it was volatile. And the markets have certainly delivered on that promise.

In April, you may recall, momentum suddenly stalled after five straight months of gains. Over the span of 30 days, the S&P dropped 4%… the Dow fell 5%… and small caps – as measured by the Russell 2000 – plummeted more than 7%.

The causes at the time, according to S&P Global, were “geopolitics, rising government bond yields, inflation and monetary policy concerns.”

By mid-May, of course, things had turned around. Losses were recouped and investors were piling back into the markets.

Apparently those worries about geopolitics, bond yields, inflation, and sky-high interest rates weren’t so severe after all.

As you know, stocks went on a tear over the months that followed.

Then the yen carry trade threw investors for another loop.

Now here we are on the other side of that whole mess.

The difference this time is we know the Federal Reserve intends to cut rates in September – by 25 basis points, if not 50.

Many analysts expect it will be the first in a series of consecutive cuts that will bring borrowing costs down to a much more manageable level for businesses and individuals.

That’s likely contributing to this quick market turnaround compared to April.

And it’s why Shah is now saying to “go long” on stocks.

The economic environment is changing… and it should be positive for large-, mid-, and small caps alike.

Robert agreed in yesterday’s issue of Total Wealth.

“Stocks are back in the driver’s seat,” he wrote. “And history shows the trend is likely still ‘up.'”

He pointed to earnings – a key driver of big market moves, even in the age of narrative – which have been growing at a rapid clip for many companies.

Despite still-high inflation and soaring interest rates, many businesses continue to book record profits.

Robert pointed out that despite some turbulence surrounding their earnings releases, many of the Magnificent Seven stocks topped earnings estimates.

That trend should continue as the path ahead grows smoother for businesses of all sizes.

Here’s hoping that will translate to smoother markets as well.

After all, being back in black is great…

But staying in the black? Now that’s cause for celebration.