Good Q3 for the Stock Market; Can Q4 Keep Up the Pace?

Monday, September 30th, 2024

Market fortunes resumed on this last trading day of September and calendar Q3. New all-time high closes on the Dow and S&P 500 again lead the way into Q4. The Dow eked out +17 points, +0.04%, to 42,330, while the S&P led all major indexes, +0.42%, to 5762. The Nasdaq rose +0.38% on the day, still -3% from its all-time highs back in July of this year, as it is with the small-cap Russell 2000, +0.09% for the session.

A Very Brief History of Q3 in the Stock Market

Calendar third quarter (Q3) of 2024 came in hot, with the AI trade showing strength behind NVIDIA (NVDA Quick QuoteNVDA - Free Report) and other well-positioned plays. After a pretty major re-think that led to a heavy sell-off in August, the quarter is closing strong behind hopefulness regarding further interest rate cuts, including companies in the Homebuilding space looking for more affordable mortgages. Lennar (LEN Quick QuoteLEN - Free Report) is up +11% in Q3, and KB Home (KBH Quick QuoteKBH - Free Report) is +22%.

Chicago Business Barometer Ticks Up

A relatively minor PMI print earlier today, the Chicago Business Barometer for September came in somewhat better than expected. While still in contraction, sub-50, its 46.6 reported this morning was above the 45.3 anticipated and the 46.1 posted a month ago. We hope to see this metric of regional business outlook continue to improve, as potential turbulence from things like the General Election on November 5th will have come and gone.

Carnival Cruise Stock Up on Q3 Outperformance

Carnival Cruise Lines (CCL Quick QuoteCCL - Free Report) reported Q3 earnings results this morning, with earnings outpacing the Zacks consensus to a solid dime to $1.27 per share. This amounts to a positive surprise of +8.55%. Revenues also surpassed expectations to $7.9 billion in the quarter, +1% above what analysts were looking for. CCL stock had been flat year to date, but shares are now up +6.9% going into the final quarter of the year.

For more on CCL's earnings, click here.

Things to Bring With Us into Q4

In normal stock trading years, September is the challenging month to finish off Q3, and Q4 bounces back with a strong October (not all of the time, but often). But this September was itself a bounceback from a weak August. Can we really expect Q4 to continue to outperform at or near its present pace?

There are some reasons to doubt this. As mentioned above, one thing is the presidential election, which does have the potential to turn into a circus (or worse). Another is a potential port strike just at the foothills of holiday shopping season. Any prolonged pains here may cause retailers, etc. to take a hit on their share prices. There’s also war in the Middle East, which is currently getting bigger not smaller. 

That said, the new massive stimulus to the Chinese economy looks to be a positive for businesses around the globe. The Fed deserves a lot of credit for getting this inflation plane down safely — Captain Sully-like. Maybe we’re not floating in the Hudson River just yet, but we are hovering above it.

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