Weekly Market Recap: Fed Caution, Consumer Strength, and What’s Ahead for 2025
Market Overview
U.S. markets closed the final full week of 2024 on a mixed note. The S&P 500 delivered another impressive annual gain of over 20%, marking a rare consecutive year of such returns. Small caps also saw notable annual growth of 11.8%, driven by optimism around deregulation and corporate tax cuts. International equities had a varied year, with emerging markets outperforming, led by China, while developed markets struggled due to euro and yen weakness.
Commodities had a modest year overall, though LNG and gold stood out with robust annual returns of 67% and 27%, respectively. In fixed income, high-yield bonds performed well, benefiting from central bank easing and low default rates, but long-term U.S. Treasuries faced challenges from elevated rates.
Federal Reserve Insights and Economic Roundup
The Federal Reserve maintained a cautious approach in 2024, cutting rates gradually but signaling potential stickiness in inflation. Despite these rate cuts, long-term Treasury yields remained elevated due to fiscal concerns and economic resilience. Core inflation decelerated, yet wage growth continued to bolster consumer spending, keeping the economy on a solid footing.
November data reflected resilient consumer strength, with retail sales and disposable income adjusted for inflation showing positive growth. This strong consumer base has supported GDP growth, even as corporate earnings faced headwinds in certain sectors.
The Week Ahead
Key economic data to watch as we head into 2025 includes:
- Monday: ISM Manufacturing PMI
- Tuesday: Consumer Confidence Report
- Thursday: Initial Jobless Claims, Continuing Claims
- Friday: Advance Goods Trade Balance, Wholesale Inventories