Market Overview
The markets in 2024 were driven by two key narratives: the Federal Reserve's monetary policy and technological advancement. While the Fed maintained higher rates through most of the year, they finally initiated cuts in September with a 0.50% reduction, followed by 0.25% cuts in both November and December. The tech sector, particularly companies involved in artificial intelligence, helped push markets to unprecedented levels.
Market Performance
The numbers tell a compelling story of growth:
- NASDAQ Composite: +28.02% (through November)
- S&P 500: +26.47% (through November)
- Dow Jones Industrial Average: +19.16% (through November)
Economic Indicators
The U.S. economy showed remarkable resilience throughout 2024. GDP growth strengthened as the year progressed:
- Q1: 1.6%
- Q2: 3.0%
- Q3: 2.8%
- Q4 (projected): 3.2%
Inflation continued its downward trend, reaching 2.6% by October 2024, though core inflation (excluding food and energy) remained elevated at 3.3%. The job market stayed robust, maintaining an average of 180,000 new jobs per month through October, despite a temporary dip to just 12,000 jobs added in October due to natural disasters and industrial action. The unemployment rate ended November at 4.1%, after peaking at 4.3% in July.
Housing Market
The housing sector showed signs of moderating, with median home prices declining from $426,800 in Q1 to $420,400 in Q3. However, mortgage rates remained relatively high at 6.8% by November's end, despite the Fed's rate cuts. Existing home sales reached an annualized rate of 3.96 million units by October, slightly exceeding market expectations.
Global Perspective
International markets presented a mixed picture. The MSCI EAFE Index posted a modest 3.56% gain through November. Several countries showed strong performance with returns exceeding 10%, including China, Japan, India, Egypt, Australia, Germany, Spain, and Italy. However, markets in Korea, Brazil, Mexico, and France experienced declines.
Inflation moderated globally, with G20 countries projected to see a decrease to 5.4% for 2024, down from 6.1% in 2023. Many developed nations showed significant progress in controlling inflation:
- China: 0.3%
- France: 1.3%
- UK: 2.3%
- Japan: 2.3%
- Italy: 1.4%
Looking Ahead
As we enter 2025, several key factors warrant attention:
- The Fed has indicated potential for two additional rate cuts in 2025
- Ongoing geopolitical tensions in Ukraine and the Middle East continue to influence market sentiment
- Despite overall economic improvement, concerns persist about high costs of living, particularly in housing, food, and energy sectors
- The incoming administration's policy initiatives will likely shape economic conditions, though their specific impact remains to be seen
The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.
Nasdaq is a global electronic marketplace for buying and selling securities. Its name was originally an acronym for the National Association of Securities Dealers Automated Quotations. S&P 500 – A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Dow Jones Industrial Average (DJIA) is a stock market index that tracks 30 large, publicly owned blue-chip companies trading on the New York Stock Exchange (NYSE) and Nasdaq.
Additional risks are associated with international investing, such as currency fluctuations, political and economic stability, and differences in accounting standards.