Q4 2024 Market Insights - Patriot Investment Management Group

U.S. Markets

Stocks posted solid gains in Q4 as investors navigated the presidential election, overseas unrest, and Fed rate cuts.

The Standard & Poor’s 500 Index rose 2.41%, while the Nasdaq Composite surged 6.17%. By contrast, the Dow Jones Industrial Average edged up only 0.51%.1

Back and Forth in October

Stocks slipped in October as pre-election jitters hung over trading while solid but not spectacular Q3 corporate reports failed to lift spirits.2

Middle East tensions unsettled investors early in the month. However, as the month progressed, investors took a wait-and-see approach. That bumpy beginning gave way to an upbeat jobs report from the Department of Labor, which boosted stocks. The Fed previously told investors that it’s focused on the jobs market as well as inflation, which elevated the importance of the monthly jobs report.3

Fed, Inflation Grab Headlines in November

Despite a jittery start to November, stocks rallied following Election Day results and gained momentum following the Federal Reserve’s second consecutive interest rate cut. The S&P 500 crossed the 6,000 mark for the first time, while the Dow breached 44,000.4,5

The markets took a breather as investors anxiously awaited fresh inflation data. News that retail and wholesale prices ticked up slightly in October sent markets down, even though both numbers were in line with economists’ expectations. Stocks remained under pressure after unexpected comments from Fed Chair Powell, who said the Fed wasn’t “in a hurry” to cut rates.6

Back-to-Back Gains for S&P 500

Markets were a mixed bag in the final month as the Dow Industrials and S&P 500 fell, while the Nasdaq posted a modest gain. The Dow was down 12 of the first 13 trading days of the month, including 10 consecutive sessions that marked its longest losing streak since 1974.7

The Fed’s quarter-point cut on December 18 was widely expected. Less expected was Fed Chair Jerome Powell’s signaling of fewer rate reductions next year. Markets fell in response and came under pressure again as a government spending bill appeared to stall in Congress. However, a lower-than-expected inflation update boosted the market and helped erase some earlier losses.8,9

Despite the sluggish finish, the S&P 500 ended the year up 25%—its second consecutive gain of more than 20%.10

The Fed

As expected, the Federal Reserve lowered interest rates by a half percentage point in Q4. The Fed Funds Rate target range ended the year at 4.25–4.50%.

Fed Chair Jerome Powell took the opportunity at both Q4 FOMC meetings to signal less certainty on the pace and timing of rate adjustments in 2025. Following the December meeting, the Fed Chair said, “From here, it’s a new phase, and we’re going to be cautious about further cuts.”11,12

The FOMC’s next meeting is scheduled for January 28–29.

What Investors May Be Talking About in January

Expect attention to shift to Inauguration Day. Wall Street will be watching to see what policies the White House exacts through executive order and what policies will follow a legislative process.

Updated and stricter tariffs may be implemented quickly by the next administration. Some economists have speculated that the new programs may be inflationary, but others are less concerned, reminding investors that many tariffs have remained in place for the past four years.13

However, overseas trading partners appear to be bracing for fresh tariffs. In mid-December, the European Central Bank—anticipating possible U.S. trade tariffs on goods from Europe—cut interest rates for the third time in as many months. And China has toughened its talk around economic stimulus, promising a more proactive fiscal policy and looser monetary policy in anticipation of trade tensions with the incoming U.S. administration.14,15

We Are Here for You

At Patriot, we will continue to focus on what we can control – asset allocation, costs, and having a plan. We consistently communicate the importance of diversification through low-cost index funds, reasonable withdrawal rates, and not trying to time the market. These three variables are critical in the success of one’s financial plan. If you want to review your allocation or your goals, we are a phone call or e-mail away.

WSJ.com, December 31, 2024
Insight.FactSet.com, November 1, 2024
WSJ.com, October 4, 2024
WSJ.com, November 6, 2024
WSJ.com, November 7, 2024
Reuters.com, November 14, 2024
CNBC.com, December 17, 2024
WSJ.com, December 18, 2024
APNews.com, December 21, 2024
CNBC.com, December 31, 2024
11. The Wall Street Journal, November 7, 2024
12. The Wall Street Journal, December 18, 2024
13. TaxFoundation.org, June 26, 2024
14. APNews.com, December 12, 2024
15. WSJ.com, December 9, 2024

This content is developed from sources believed to be providing accurate information and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.