Happy Friday!
A technology failure causes global outage to end an uncharacteristically volatile summer week in the stock markets. Presidential re-election years are historically favorable for stock returns…see the 2024 performance of political stock baskets! Charitable giving sets a record in 2023. Golf’s oldest championship, the British Open, is in full swing.
#1 – Weekly Market Recap
Volatility is back! Through yesterday’s market close, the Dow Jones lead stock market returns gaining +1.7%. The S&P 500 declined -1.3% and the technology heavy Nasdaq experienced its worst week since April and dropped -3.1%.
Wednesday’s news of possible new restrictive regulations on computer chips drove the Nasdaq down -2.9% for its worst performing day since December 2022.
A software glitch at Crowdstrike caused overnight global technical issues including flight delays, communication disruptions and overall technology shutdowns. As the US wakes up this morning, it appears that the source of the issue has been identified and systems are coming back online. The global outage is a good reminder of how interconnected, and potentially vulnerable, the global technology infrastructure has become.
Overall, it was an uncharacteristically busy week for summer with investors analyzing the timing of Federal Reserve interest rate cuts, an assassination attempt on former President Trump, talk of President Biden withdrawing from the Presidential race, political speeches from the Republican Nation Convention and the aforementioned news of new restrictive trade controls to limit Chinese access to advanced chips. All of this occurred as the second quarter earnings season also got underway. No wonder it was an uncharacteristically volatile week for the stock markets!
#2 – Election Season
With the US elections now just over three months away, investors appear to be focusing on how various election results could impact financial markets.
Historically, election years have provided positive stock returns. Over the past 24 election years dating back to 1928, the S&P 500 was positive 83% of the time. The average return for those 24 election years was roughly +11%, above the historical average S&P 500 return of +9.9% over the same time period.
However, 2024 is more than just a Presidential election year. It is a re-election year. According to research firm Strategas, re-electionyears have historically been even more positive for stocks.
As seen in the chart below from Strategas, dating back to 1944, the S&P 500 has been positive in 13 consecutive re-election years with average returns of +15.8%. This pattern appears to be repeating itself — the S&P 500 returned 15.3% through the first six months of 2024.
Source: Strategas (6/27/2024)
Goldman Sachs has grouped stocks from various sectors into “Republican” and “Democratic” baskets. The “Republican” basket includes companies in areas such as construction, energy, and financials while the “Democratic” basket includes companies in areas such as infrastructure, renewables and health care.
At DSG Advisors, we created the chart below representing the performance of those baskets of stocks this year. As you can see, although there have been several lead changes in the performance of the baskets, it appears to currently be a very close race…just like the election!
Make sure to follow the results of performance of these baskets leading up to the election. With news that President Biden is considering dropping his candidacy, the performance of the baskets will be worth closely monitoring.
#3 – Charitable Giving Increases
According to the publication, Giving USA 2024: The Annual Report on Philanthropy for the Year 2023, individuals, foundations and corporations gave a record $557 billion to US charities in 2023.
The increase in dollars gifted was partially buoyed by the strong stock market and economic growth. According to the Giving USA Foundation, Americans increased their giving despite the increased cost of living. Charitable giving grew 1.9% in 2023 over 2022 levels. It did not, however, outpace the 4.1% inflation rate.
“Nonprofits have had to navigate many unpredictable developments in the last few years including a rare decline in charitable giving in 2022 and changes brought on by the pandemic. “While the philanthropic landscape continues to evolve, it’s encouraging to see that giving continues to be resilient,” said Amir Pasic, Ph.D., the Eugene R. Tempel Dean of the Indiana University Lilly Family School of Philanthropy.
In total dollars, giving grew in all nine categories of nonprofits that receive charitable contributions. The categories that saw the strongest growth were gifting to Foundations and Public-Society Benefit — which include donor advised funds.
“Giving to these areas is also well above pre-pandemic levels, indicating that the wealthy donors who tend to give to grantmaking organizations continue to invest in the future of the nonprofit sector,” said Wendy McGrady, Vice Chair of Giving USA Foundation.
Source: Indiana University
Source: Giving USA
#4 – British Open Tees Off
The 152nd edition of the British Open, golf’s oldest championship, teed off yesterday.
Royal Troon, the century-old Scottish links course, is hosting the men’s final major tournament of the year for the 10th time. The course is situated on the Ayrshire Coast, Scotland’s sandy, windswept west coast on the Firth of Clyde. Royal Troon is best known for having the shortest hole of all The Opens – a 123-yard par-three nicknamed the “Postage Stamp” for its tiny 2,500 square foot green.
Nearly 160 of the best golfers in the world teed off yesterday. Players to watch include #1 in the world Scottie Scheffler (-1 on Thursday), Xander Schauffele (-2 on Thursday), and current dark-horse leader Daniel Brown (-6 on Thursday) playing in his first career major. Perennial favorite Tiger Woods is also playing and will need a good showing today to make the cut (+8).
The winner will take home many perks, including a gold medal and this year’s first-place prize of $3.1 million. However, the prestige of winning the British Open Championship is receiving the coveted Claret Jug. First awarded in 1873, the winner gets to keep the Jug for an entire year until it’s returned the following year when they are given a replica to keep.
We’ll be watching to see who claims the title in Britain’s most prestigious golf tournament!
Source: PGA Tour
Source: AP News