Economic Update 12-30-2024
- In a holiday-shortened week, economic data included declines in durable goods and consumer confidence and a rise in new home sales.
- Equities gained around the world last week, with developed markets outearning the U.S. and emerging markets. Bonds fell back as a whole, as yields continued to rise due to a number of underlying dynamics. Commodities were mixed, with positivity in energy and base metals.
U.S. stocks saw gains on net for the short week, despite a pullback by Friday, with additional pressure from higher long-term interest rates. Nearly every sector saw gains, led by energy, health care, communications, and financials, while materials and consumer staples saw slight declines. Real estate earned a small gain, despite interest rates rising again. The last several trading days of a calendar year can result in some unusual market movements at times, due to lower trading volumes because of vacations and institutional portfolio repositioning, including popular ‘window dressing’ trading activity, reset of cash levels, and other rebalancing activities.
Foreign stocks saw gains as well, seeing overall gains surpassing the U.S. Japan led the way, with gains of several percent, followed by Europe and the U.K. up around a percent, while emerging markets were little changed on net. There was minimal news during the short week overseas as well, with a downgrade of U.K. GDP growth for the prior quarter by a tenth (to 0.0%), and ongoing angst about potential tariff impacts from the incoming U.S. administration next year. In EM, gains in China were offset by declines in Latin America, and mixed results in the rest of Asia. Hope persists in China that government stimulus will continue to ramp up to support still-robust economic growth targets. The strongest gains came from Turkey, where hopes for more conventional central bank monetary policy coincided with a rate cut from 50.0% to 47.5% (!), as inflation has decelerated.
Bonds fell back generally, along with rising interest rates as investors continued to digest the likelihood of the Fed’s ‘higher for longer’ narrative (again). Floating rate bank loans were the exception, with minor gains, in keeping with normal tendencies. Foreign bonds fell back to the same or worse degree, not helped by the stronger U.S. dollar for the week.
Commodities were mixed, with gains in energy and industrial metals, offset by declines in precious metals and agriculture. Crude oil rose about a percent last week to $70/barrel, as investors continued to evaluate the balance of demand (still lower than hoped) and supply (still robust) going into year-end.
Have a good week and Happy New Year. We appreciate your partnership and wish you and your families the best in 2025.
|
Period ending 12/27/2024 |
1 Week % |
YTD % |
|
DJIA |
0.35 |
16.20 |
|
S&P 500 |
0.70 |
26.90 |
|
NASDAQ |
0.78 |
32.32 |
|
Russell 2000 |
0.11 |
12.20 |
|
MSCI-EAFE |
1.79 |
4.43 |
|
MSCI-EM |
1.04 |
8.24 |
|
Bloomberg U.S. Aggregate |
-0.33 |
0.93 |
|
U.S. Treasury Yields |
3 Mo. |
2 Yr. |
5 Yr. |
10 Yr. |
30 Yr. |
|
12/31/2023 |
5.40 |
4.23 |
3.84 |
3.88 |
4.03 |
|
12/20/2024 |
4.34 |
4.30 |
4.37 |
4.52 |
4.72 |
|
12/27/2024 |
4.31 |
4.31 |
4.45 |
4.62 |
4.82 |
Sources: LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research. Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends. Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.
The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness. All information and opinions expressed are subject to change without notice. Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.