Monthly Market Update - 2024 Year in Review & 2025 Economic Outlook

Countiss Wealth Management. Monthly Market Update - January 2025. https://youtu.be/NmzDSWpHE3M

Summary: In January 2025, the U.S. economy showed resilience with steady GDP growth and a declining unemployment rate. The Federal Reserve maintained interest rates while inflation remained within target levels. Equity markets experienced modest gains, driven by strong corporate earnings, particularly in the technology and healthcare sectors. Bond markets remained stable, with yields showing little fluctuation. Overall, the economic outlook remains positive, supported by robust consumer spending and business investment.

-- Hey everyone! I am so excited to introduce to you our monthly market update. Each month, we will give you an overview of what is going on in the markets. In this day and age, there is so much information being put in front of you. We want to make sure that you can hear from your financial advisor what you should really be paying attention to. However, any specific investments or recommendations will not be included because, as you know, we always consider what is best for you personally, so we're not going to make any blanket recommendations. So, with all that being said, welcome to our very first monthly market update.

As we turn the page to 2025 let's take a look at what shaped the markets in 2024 and explain the key themes for this year and what it might mean for your portfolio.  

S&P 500 Index And Sectors Return Year To Date

The US stock market led global gains, with the S&P 500 soaring 25%. In this graph, you will see the different sectors that make up the S&P 500. Growth stocks and tech giants like NVIDIA, Tesla, and Meta drove the US rally.

For this next part, you need to understand the difference between small-cap, mid-cap, and large-cap. The difference between the type of company that would be small, mid, or large is their market valuation. In order to be considered large-cap, you have to have a market valuation of over $10 billion—think Microsoft, Amazon, Tesla, Alibaba. Mid-cap companies are valued between 2 billion and 10 billion, and then small-cap are companies valued from 300 million to 2 billion.

So, large-cap growth stocks were up 33% in 2024, while large-cap value stocks were up 14%. Value stocks are companies like Nike, Pfizer, and Campbell’s Soup that are not going to fluctuate in price significantly but will pay out a solid dividend. So, while the return on these companies this past year was not as good, they also don’t go up and down as much. As a whole, large-cap investments were up 25% in 2024, while mid-cap investments were up 15%, and small-caps were up 12%.

International Markets (Developed & Emerging)

Meanwhile, international markets delivered more modest results—developed markets were +4% while emerging markets were +8%. Here, we see how different countries impacted the overall results of the foreign benchmarks.

U.S. Valuations

US valuations have risen significantly over the past couple of years, with the S&P 500’s price-to-earnings ratio now at 21.5x, above its 30-year average. What this means is that companies have a higher valuation relative to the amount of money that they are actually making. This signals optimism in the US market, but it is also a function of the index’s increasing weight toward the faster-growing, more expensive tech and consumer-oriented companies. While we are still paying attention to valuations, we would note that valuations are not something that we look at to time the market because valuations can remain high, i.e., stocks can remain expensive for longer stretches of time. Ultimately, higher valuations underscore the importance of diversification – across sectors, regions, and asset classes - as we move forward.

Treasury Yield Curve (Bonds, Real Estate & Commodities)

In the world of bonds, while interest rates are still much higher than levels from 3 years ago, the Federal Reserve is slowly and cautiously in the process of trying to bring rates lower to help ease the early signs of a slowing labor market while balancing the risks of a stubborn inflation fight. The yield curve remains only modestly inverted, signaling a cautious stance for 2025. 

Looking ahead, inflation’s steady decline offers hope, but elevated valuations and market concentration highlight the need for balance. Diversifying across regions, sectors, and styles remains key across stocks, bonds, and alternatives. 

At Countiss Wealth Management, we’re here to help you navigate these opportunities and challenges. As always, we appreciate your business, but we value your trust, and I'll keep you posted.