Stock Market This Week

Stock Market This Week – 02/24/24

Stock Market This Week

Stock Market This Week – 02/24/24

The stock market bulls are clearly in control right now. Stellar results from Nvidia (NVDA) drove the stock higher and brought along the broader market. The company is closing in on a $2 trillion market capitalization and is now more valuable than Amazon, Alphabet, and Meta Platforms. It ranks only behind Microsoft and Apple.

That said, it leads to the question of when the next bear market will occur. Market doomsayers claim a recession and presumably a bear market are around the corner because of an inverted yield curve and high business and consumer debt loads. A bear market is when the market drops 20% or more. One is always a possibility because markets are volatile. 

Four bear markets have happened since I started investing in the early 1990s. They are the dot-com crash, a painful experience for those heavily invested in tech and growth stocks. Next came the Great Recession, led by massive declines and bankruptcies in financial stocks. More recently, the COVID-19 bear market caused many dividend cuts. After a recovery, inflation and rising interest rates resulted in the bear market of 2022.

It seems like a lot to worry about. But over about 35 years, there were only four bear markets or one in every 8 – 9 years, equating to roughly 11.4%. In reality, the percentage is lower if we consider the number of days. These bear markets lasted approximately 936 days over a span of ~12,775 days. The probability of a 20% or greater downturn was ~7.4%.

It makes little sense for me to worry incessantly about something that may happen so infrequently. Granted, a bear market will eventually occur, but two just happened in a three-year period, and a third one so soon would be contrary to the long-term percentages. One must return to the Great Depression for multiple ones to transpire in a row. Further, with unemployment so low and job growth still robust today, it seems unlikely.

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Stock Market Overview

Data from Stock Rover* showed a mixed week for the stock market. However, the stock market bulls were back in control after a few difficult weeks. The S&P 500 Index, the Dow Jones Industrial Average (DJIA), and the Nasdaq Composite all gained. The Russell 2000 was the only index down for the week because small-cap stocks continued to struggle.

However, all 11 sectors generated positive returns this week. The Consumer Defensive, Basic Materials, and Industrials sectors were top performers. However, the Communication Services, Real Estate, and Energy sectors were the worst performers.

Oil prices fell after a few weeks of gains to ~$76.57. The VIX was down to 13.75, which is still well below its long-term average. Gold ended the week at ~$2,046 per ounce.


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Stock Market Returns This Week
Source: Stock Rover*

The markets continue to move upward due to the economy’s strength and continuation of the bull market. The S&P 500 leads the way, followed by the Nasdaq and the DJIA. Only the Russell 2000 is in negative territory. Nine of the 11 sectors have positive returns. The top performers in 2024 have been Communication Services, Healthcare, and Technology, while the Basic Materials, Utilities, and Real Estate sectors are trailing.

YTD Stock Market Returns
Source: Stock Rover*

The dividend growth investing strategy started the year down. Larger market capitalization stocks are performing better than smaller ones. The table below shows their performance by category. However, dividends and passive income streams continue to grow.

CategoryYTD Return (%)
Dividend Kings+0.8%
Dividend Aristocrats+2.3%
Dividend Champions-0.7%
Dividend Contenders-0.8%
Dividend Challengers-0.7%
Source: Stock Rover*

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Stock Market Valuation This Week

The S&P 500 Index trades at a price-to-earnings ratio of 27.62X, and the Schiller P/E Ratio is about 34.25X. These multiples are based on trailing twelve months (TTM) earnings.

The long-term means of these two ratios are approximately 16X and 17X, respectively. 

Despite the recent correction, bear market, and rebound, the market is still overvalued. Based on historical data, earnings multiples of more than 30X are overvalued.

Resources

Curated Weekend Reading From Around The Web

Portfolio Management and Investing

Retirement

Financial Independence


Here are my recommendations:

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  • Stock Rover is the leading investment research platform with all the fundamental metrics, screens, and analysis tools you need. Try it free for 14 days.
  • Portfolio Insight is the newest and most complete portfolio management tool with built-in stock screeners. Try it free for 14 days.


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*This post contains affiliate links meaning that I earn a commission for any purchases that you make at the Affiliates website through these links. This will not incur additional costs for you. Please read my disclosure for more information.

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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.

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