Fed Continues Policy Pivot: The Federal Reserve lowered its benchmark borrowing rate by 0.25% in December but pointed to fewer rate cuts in 2025.
We Could See Increased Rate Volatility: As the market absorbs the results of the election and the policy implications, we could see an elevated level of interest rate volatility.
The Probability of a Soft Landing has Moved Higher: While inflation has been stickier just above the Federal Reserve’s target rate, we continue to believe a strong economy and lower inflation set up well for a soft landing.
2025 Expectations: We are cautiously optimistic that equity markets can continue to perform well, albeit unlikely at the same pace we’ve seen over the last 2 years.
Equity Markets Gave Back Some Gains in December: The S&P 500 was down by -2.5% in December following the strong gains in November.
Traders Debating How Much the Fed Will Cut Next: Futures markets have lowered the number of cuts they are expecting next year, currently pricing in ~ 0.50% of easing.
Equity Markets
After closing at record highs in November, equity markets gave up some of their gains to close out the year in December. For the month, the S&P 500 fell -2.5% to close at 5,882. The technology-heavy Nasdaq was actually higher by 0.5% for the month, while the more value-oriented Dow Jones Industrial Average was down -5.3%. Small caps fared the worst this month, with the Russell 2000 falling by -8.4%.
For the full year, the S&P 500 finished higher by 23%, while recording 57 record closes along the way. Combined with 2023, this was the best 2-year performance for the index since 1997-1998. The Nasdaq finished higher by 29%, powered by high growth technology and AI related stocks. The Dow Jones Industrial Average was higher by 13% and the Russell 2000 was up by 10%.
Cautiously Optimistic
Cautiously Optimistic
Performance Review & Outlook
Highlights
Equity Markets
After closing at record highs in November, equity markets gave up some of their gains to close out the year in December. For the month, the S&P 500 fell -2.5% to close at 5,882. The technology-heavy Nasdaq was actually higher by 0.5% for the month, while the more value-oriented Dow Jones Industrial Average was down -5.3%. Small caps fared the worst this month, with the Russell 2000 falling by -8.4%.
For the full year, the S&P 500 finished higher by 23%, while recording 57 record closes along the way. Combined with 2023, this was the best 2-year performance for the index since 1997-1998. The Nasdaq finished higher by 29%, powered by high growth technology and AI related stocks. The Dow Jones Industrial Average was higher by 13% and the Russell 2000 was up by 10%.
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