President Trump’s inauguration marks a significant political shift amid market and economic uncertainty. The stock market had rallied as much as 5.3% with dividends in the month following the November election, before giving up about half of those gains at the start of the year. As President Trump begins his second term, both Wall Street and Main Street are wondering what the next four years may bring.
US equities were higher in Q4, with the S&P 500 delivering a 2.4% return. One major highlight was that all 4 quarters were positive--the last time that happened was in 2021, and the markets ended the year with its 5th straight positive quarter. The quarterly return was the most muted of the four quarters. November delivered almost a 6% return—the best month of the year. The month was fueled by a 2.5% gain on November 6--following a smooth and uncontested election—the strongest post-election day performance dating back to 1928.
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.