closeup photo of baubles on christmas tree by Chad Madden courtesy of Unsplash.

December 2024 Market Perspective

Ryan Hastie, Partner |

November was a strong month for U.S. equities as the market saw a broad-based, post-election rally with all three major indices seeing solid performance and reaching new highs. As expected, the Federal Reserve (Fed) voted unanimously at the conclusion of their November meeting to lower rates by 25 basis points (0.25%) to a range of 4.50 – 4.75%. Fed Chair Jerome Powell stated, as he has since the Fed began its fight against inflation in 2022, that Fed policy will continue to be data dependent and future rate decisions will be made on a meeting-by-meeting basis. Below is a brief summary of the month:

  • Stocks Rally in November

U.S. stocks rose on rising investor optimism for faster growth ahead 

  • Bonds Rebound as Federal Reserve Cuts Rates

Falling interest rates supported bonds during the month

  • Supportive Economic Backdrop

The economic updates released in November showed signs of economic growth

  • Risks to Monitor

Markets face a number of risks as we finish the year

  • Positive Outlook Ahead

We believe the most likely path forward is for continued market appreciation and economic growth

 

For the month of November, the S&P 500 and Nasdaq Composite (Nasdaq) gained 5.87% and 6.29%, respectively. The Dow Jones Industrial Average (Dow) led the way with a 7.74% increase for the month. All three major indices set record highs during the month, highlighting rising investor optimism for continued growth ahead. 

The strong results were supported by improving fundamentals. Per Bloomberg Intelligence, as of November 29 with 97% of companies having reported earnings, the average earnings growth rate for the S&P 500 in the third quarter was 9%. This is more than double analyst estimates at the start of earnings season for a more modest 4.2% increase. This encouraging result is a good sign for investors, as fundamentals ultimately drive long-term market performance. 

Bonds were up during the month, supported by falling interest rates. The 10-year Treasury yield was volatile during the month; however, it ended November at 4.18%, down from 4.37% at the start of the month. The Bloomberg Aggregate Bond Index gained 1.06% in November. 

 

Our Perspective

Although risks remain, we are confident in the path forward for the market. Inflation continues to be front and center for investors and the market, presenting the possibility of future volatility. The December release of November’s Consumer Price Index (CPI) report, which tracks a basket of goods and services, was in line with expectations. November showed a 0.3% rise from October and a 2.7% increase from last year (up from 2.6% in October). Core CPI, excluding volatile food and energy prices, increased 0.3% on the month and 3.3% from last year. While this inflation data represented a quicker pace from the previous month, traders speculated it was still not high enough to keep the Fed from cutting rates at its next meeting – scheduled for December 17 & 18. Fed funds futures are now pricing in a more than 94% likelihood that the central bank lowers rates, according to CME’s FedWatch. “We expect a rate cut in the final meeting here at the end of the year,” Tom Hainlin, senior investment strategist at U.S. Bank Asset Management, told CNBC. “With no surprises, the direction of the markets has been higher, and there’s been nothing to derail it from melting up into year-end.”

 

All indices are unmanaged, and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.