As we kick off 2025, it’s important to reflect on the success of 2024. Overall, there is much to appreciate, but also some risks to monitor as sentiment and positioning have become one-sided and divergences are beginning to emerge with rotation and movement beneath the surface.
The Federal Reserve's recent actions and communications affect both the markets and economy, especially as we head into 2025. Following Fed Chair Jerome Powell's press conference stocks plunged with the S&P 500 declining three percent—it’s worst day since August. Let me break down the key points to help provide perspective.
As we reflect on 2024, it's worth noting how many anticipated challenges failed to materialize. Despite widespread concerns about recession, market downturns, and political instability, markets demonstrated remarkable resilience. Looking ahead to 2025, the focus shifts from extremes to equilibrium.
The investment landscape in 2024 has provided numerous bright spots for market participants. This exceptional performance comes against a backdrop of strong economic indicators, including moderated inflation, robust employment figures, and sustained GDP growth - all despite various challenges including Fed policy uncertainty, election dynamics, and global tensions.
Interest rates have been surprising many people lately. Even though the Federal Reserve is planning to lower rates, longer-term rates like the 10-year Treasury have actually gone up from 3.62% to 4.38%. This is happening because the economy is doing well and people potentially expect sticky inflation after the results of the election. What does this mean for your money?
As the S&P 500 continues to march upward, the path of least resistance appears to be higher. Through October 31, the S&P 500 has registered 47 new all-time highs. The S&P is now sitting about 60% above its October 2022 low.