AE Wealth Management: Weekly Market Insights | 12/22/24 – 12/28/24
Weekly Market Commentary
THE WEEK IN REVIEW: Dec. 22-28, 2024
Markets lose some fizz after Christmas
The market found its footing after the disappointment following the most recent Federal Reserve meeting. We recovered most of the losses and were right back to the levels we were at just prior to the Fed telling us not to expect as many rate cuts in 2025 as markets had hoped for and already priced in. Monday and Tuesday were solid days as the momentum from the end of the prior week continued to push markets forward. Trading closed early on Christmas Eve and the country settled in for the holiday.
But when markets opened on Thursday, they fretted about the 10-year U.S. Treasury bond topping 4.6% and the advance stalled.1 By Friday, large tech stumbled and dragged the Nasdaq down.2 With only three days left in the trading year, it didn’t take much for traders to pack it in, take some profits and play it safe.
And frankly, why not? The S&P 500 is up over 25% for the year, while the Dow is up over 14% and the Nasdaq is up over 31%.3,4,5 With light staffs, portfolio managers doing a little profit-taking and window-dressing, limited economic news, and most of the seasoned traders on “Twixmas” break, it would make sense that markets slide quietly into year-end. The selling accelerated as we closed out last Friday, giving back virtually all the short week’s gains.6
The first few days of this week likely won’t be much different, with the possible exception of some frantic activity as portfolio managers and traders close out their books on New Year’s Eve. With the absence of solid news or an established narrative, markets will always find something to worry about — and that appears to be the case here. The economy is solid, we’re nowhere near a recession, and consumers are still healthy and spending, but the markets are worried. We have to weather the storm to see if it is anything more than just the market being jittery.
Next up: 2025 (when the experts strike back)
Nobody predicted the stellar 2024 markets, and if someone says they did, they are either lying or made their prediction in December 2024. We all know the perils of relying blindly on “experts.” With that as background, let’s get in touch with Greek philosopher Socrates, who said, “I know that I know nothing.”7 Then there’s humorist Mark Twain, who added, “It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.”8
So, what are the so-called experts pitching now? It runs the gamut from a disastrous 2025 (there’s always some “sky is falling” prediction) to markets running up another 20%.9 But like most years, results should be somewhere in between. Markets could be more volatile in the coming months, but we think we could be 10% higher 12 months from now. Anything beyond that is a bonus.
The other curious thing is that “experts” never give you a solid prediction. Instead, they throw out generalities that are generic enough to allow them to swoop in once the markets have lurched in one direction or another. “Experts” also never say markets will decline because you might listen, move your money and miss a run-up — and voilà! You don’t listen to that “expert” again.
Our advice is to avoid the smooth talkers who don’t offer solid advice, especially the famous ones. Along with whatever New Year’s resolutions you choose, make sure one of them is a sit-down with your advisor to conduct a thorough review of your financial roadmap and plan. Rebalance and reallocate to make sure you’re in line with your risk tolerance and goals. Try to consume less media, not more; all it does is stress you out and wear you down. Now there’s some good expert advice you can use.
Coming this week
- This week will be even lighter than last week. Markets will be closed in the middle of the week for New Year’s Day. The only real difference this week will be that books and records need to be closed on the 31st, so markets won’t close early. There may be some activity as portfolio managers and traders shift things around to close out 2024.
- Data-wise, we’ll see Chicago PMI and pending home sales on Monday, S&P Case-Shiller home price index (of 20 U.S. cities) and MBA mortgage applications on Tuesday, unemployment claims and construction spending on Thursday, and ISM manufacturing on Friday.
- Here’s to a safe, prosperous and happy 2025 with your loved ones!
Index Performance Returns % | |||||
| S&P 500 | 0.67% | 25.18% | 24.87% | 7.61% | 13.00% |
| NASDAQ | 0.76% | 31.38% | 30.62% | 7.51% | 16.97% |
| DJIA | 0.35% | 14.07% | 14.17% | 5.80% | 8.46% |
Interest Rates: | |||||
| UST 10 YR Government Bond Yield | 4.63% | 4.53% | |||
| Germany 10 YR | 2.40% | 2.29% | |||
| Japan 10 YR | 1.11% | 1.06% | |||
| 30 YR Mortgage | 6.99% | 6.89% | |||
| Oil | $70.27/ppb | $69.57/ppb | |||
| Regular Gas | $3.03/ppg | $3.05/ppg | |||
| All data as of Dec. 27, 2024 | |||||
Sources:
1 CNBC. “U.S. 10 Year Treasury.” https://www.cnbc.com/quotes/US.10. Accessed Dec. 28, 2024.
2 Yahoo! Finance. “NASDAQ Composite (ˆIXIC).” https://finance.yahoo.com/quote/%5EIXIC/. Accessed Dec. 28, 2024.
3 Morningstar. “S&P 500 PR.” https://www.morningstar.com/indexes/spi/spx/quote. Accessed Dec. 28, 2024.
4 Morningstar. “DJ Industrial Average PR USD.” https://www.morningstar.com/indexes/dji/!dji/quote. Accessed Dec. 28, 2024.
5 Morningstar. “NASDAQ Composite PR USD.” https://www.morningstar.com/indexes/xnas/@cco/quote. Accessed Dec. 28, 2024.
6 Joe Mazzola. Charles Schwab. Dec. 27, 2024. “Schwab Market Update.” https://www.schwab.com/learn/story/stock-market-update-open. Accessed Dec. 28, 2024.
7 Wikipedia. “I know that I know nothing.” https://en.wikipedia.org/wiki/I_know_that_I_know_nothing. Accessed Dec. 28, 2024.
8 Goodreads. “Mark Twain>Quotes>Quotable Quote.” https://www.goodreads.com/quotes/7588008-it-ain-t-what-you-don-t-know-that-gets-you-into. Accessed Dec. 28, 2024.
9 Selena Maranjian. The Motley Fool. Dec. 26, 2024. “How Will the Stock Market Perform in 2025? The Experts Can’t Agree. Here’s What You Should Do.” https://www.fool.com/investing/2024/12/26/how-will-the-stock-market-perform-in-2025-the-expe/. Accessed Dec. 28, 2024.
AE Wealth Management, LLC (AEWM) is an SEC Registered Investment Adviser (RIA) located in Topeka, Kansas. Registration does not denote any level of skill or qualification. The advisory firm providing you this report is an independent financial services firm and is not an affiliate company of AE Wealth Management, LLC. AEWM works with a variety of independent advisors. Some of the advisors are Investment Adviser Representatives (IAR) who provide investment advisory services through AEWM. Some of the advisors are Registered Investment Advisers providing investment advisory services that incorporate some of the products available through AEWM.
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The information and opinions contained herein, provided by third parties, have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by AE Wealth Management.
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