Investment Update January 7, 2025

Happy New Year!

We look forward to catching up with all of you as we get into the new year. Please reach out to us if you have any questions or service issues we should address right away.
We will be in touch again soon!

Last Week on Wall Street

In a New Year holiday-abbreviated week, economic data included an improved (but still contractionary) manufacturing report, minimally-changed construction spending, and continued movement higher for residential home prices.

Equities fell globally last week, in contrast to a positive year. Bonds gained a bit as interest rates settled from recent volatility. Commodities gained along with rising prices for crude oil and gold.

U.S. stocks finished 2024 strongly, even with a December selloff, representing the second straight year of gains. However, last week ended negatively, with what appeared to be some profit-taking, late seasonal adjustments, and a downgrade of Q4 U.S. economic growth as measured by the Atlanta Fed GDPNow. In the S&P 500 by sector, energy led with gains of over 3%, followed by utilities. The largest declines were experienced by materials, consumer discretionary (primarily volatility with Tesla), and consumer staples, each down at least a percent.

Foreign stocks were down as well, with flattish results in the U.K. tempering sharper declines in Europe and Japan, as well as emerging markets. These were not helped by an approximate one percent rise in the value of the U.S. dollar for the week. Higher inflation, notably in Spain, led to chances of fewer than expected interest rate cuts over the coming year. Chinese stocks were led downward by weaker manufacturing data, which came in just above the neutral 50 level and continues to frustrate investors looking for a growth catalyst.

Bonds fared positively for the week, as interest rates fell back a bit. High yield and floating rate bank loans outperformed government bonds slightly, while unhedged foreign bonds were held back by a stronger U.S. dollar last week.

Commodities rose as a whole, led by gains in energy and precious metals, offsetting declines in industrial metals. Crude oil prices rose nearly 5% last week to $74/barrel, with hopes for higher demand this coming year were coupled with concerns over increased sanctions on Iran, which would reduce market inventories.