Market Musings 1/1/2025
Quick thoughts on the markets and major portfolio news. Not on Ursa yet? Download Ursa from the App Store!
While December ended down -2.5% on lowered 2025 rate cut expectations, it was still another amazing year for the S&P 500 up 23% in 2024.
⚫️ December Coal
The S&P 500 pulled back in December ending down 2.5% after the Fed lowered 2025 #RateCuts expectations.
We entered December at all-time highs which mostly held until the Fed meeting mid-month.
At the meeting, markets got yet another rate cut, but came away disappointed after the Fed lowered its #RateCuts expectations for next year. The Fed blamed slow #Inflation progress for the more hawkish shift.
🥳 2024 Party
While ending on a bit of a sour note, it was still another amazing year for the S&P 500 up 23% in 2024. Similar to December, the story of the year was #RateCuts.
All year, investors were eagerly waiting for enough #Inflation progress so rate cuts could begin. Despite starting later than initially expected, the Fed finally gave the all clear in September with a jumbo 50 bps plus two more subsequent cuts in the next two meetings to close the year.
The anticipation for and then the speed of cuts drove a massive year-long rally. However, the lower #RateCuts expectations for next year deflated the optimism a bit.
🧐 2025 Uncertainty
We’re starting to see the market get a little bit anxious.
#Inflation is well off the highs from 2022, but proving very sticky trying to get that last percent off to hit the Fed’s target.
The lowered rate cut forecast finally made that a reality for the market.
Heading into 2025, we’ll see if #Inflation progress can get back on track.
The market tends to have a short memory and continues to be very optimistic. We wouldn’t be surprised to see investors spin new macro data as a “glass half full” to support the Fed reaccelerating the #RateCuts plan.
As usual, we recommend adding to portfolios on a regular basis and look to take advantage of any market pullbacks for additional contributions.
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The statements, opinions and analyses presented here are provided as general information. This article is the opinion of the author. Anything within this article should NOT be considered an investment recommendation or advice. See Ursa’s full disclosures here.
Original Photo by fauxels.