As 2024 comes to a close, the Money Wise guys take a closer look at the year’s final numbers and a challenging December for the markets. The Dow Jones fell 260 points (-0.6%), the S&P 500 dropped 28 points (-0.5%), and the NASDAQ declined 100 points (-0.5%) for the week. Despite the weak December performance—attributed to Federal Reserve actions dampening the anticipated "Santa Claus rally"—2024 was an outstanding year for investors, with the Dow gaining 14.99%, the S&P 500 rising 25.02%, and the NASDAQ climbing 29.57% (including dividends).

The discussion focuses on the impact of Federal Reserve Chair Jay Powell’s policies, particularly the increase in bond yields, which saw the 10-year Treasury rise from 3.87% to 4.58% over the year. The guys highlight the uneven performance within the bond market, where shorter-duration bonds outperformed their longer-duration counterparts. Target-date funds and longer-maturity bonds faced a tough fourth quarter due to rising interest rates but still managed solid annual returns. While the Fed’s December actions tempered the year-end rally, the guys emphasize the strong returns for diversified portfolios in 2024 and tease predictions for 2025 in an upcoming episode.

Rising bond yields in 2024 had a significant impact on the financial markets, with the 10-year Treasury yield increasing by 71 basis points, from 3.87% to 4.58%. This shift, driven by the Federal Reserve’s monetary policy and persistent inflation concerns, created challenges for certain segments of the bond market. Short-term and intermediate-term bonds performed relatively well, but longer-duration bonds and funds, such as target-date portfolios, experienced negative returns in the fourth quarter due to their sensitivity to rising rates. Overall, the bond market delivered modest annual returns, with the Bloomberg Aggregate Index gaining just 1.25%, underscoring the importance of managing duration in a rising yield environment.

In the second hour, the Money Wise guys discuss Equity Inxex Annuities. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.

In this week’s episode, the Wise Money guys review a turbulent week on Wall Street, with the Dow Jones falling 988 points (-2.3%), the S&P 500 declining 120 points (-2%), and the NASDAQ dropping 354 points (-1.8%). Despite the weekly losses, year-to-date gains remain strong, with the Dow up 13.7%, the S&P 500 up 24.3%, and the NASDAQ up 30.4%. The team reflects on the market's reaction to the Federal Reserve’s latest meeting, drawing comparisons to 2018’s December volatility. With the Fed signaling fewer rate cuts than anticipated for 2025, the markets responded with a knee-jerk decline, raising questions about clarity and consistency in messaging.

The discussion highlights the challenges of interpreting Fed communications, as markets grapple with the transition back to "data dependency" and uncertainty surrounding future policy decisions. The guys explore the S&P 500’s dip below its 50-day moving average midweek and its recovery to that level by Friday, analyzing whether this correction presents a buying opportunity. They also dive into the implications of inflation’s persistence and the broader economic outlook as investors prepare for 2024.

The predicted volatility in the markets stems from uncertainty surrounding Federal Reserve policy, particularly the pace and extent of interest rate cuts in 2025. The Fed's recent shift back to a "data-dependent" approach and mixed messaging have created confusion among investors, leading to sharp market reactions. This uncertainty is further compounded by inflation’s persistence, despite rate hikes, and broader economic concerns like wage growth, housing affordability, and geopolitical factors. As the market adjusts to these evolving dynamics, investors should brace for more fluctuations in the months ahead.

In the second hour, the Money Wise guys divulge what Wall Street Won’t Tell You. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.

In this week’s episode, the Money Wise guys dive into Wall Street’s recent performance, highlighting the Dow’s 1.8% drop, the S&P 500’s modest 0.6% decline, and the NASDAQ’s 0.3% gain. Year-to-date, the Dow remains up 16.3%, the S&P 500 has climbed 26.9%, and the NASDAQ continues to lead with a 32.7% increase. The discussion shifts to the recent seven-day losing streak for the Dow—something not seen since 2020—and explores how technical indicators show markets moving sideways since early December. Historically, the second full week of December has shown similar flat or negative trends, even during a strong secular bull market.

The guys also delve into inflation, dissecting the latest Consumer Price Index (CPI) and Producer Price Index (PPI) reports. While inflation remains relatively sticky, with both measures ticking slightly higher, they explore key factors such as rising wages, which continue to outpace inflation-adjusted earnings for many workers. Housing inflation remains a significant contributor, with mortgage rates hovering above 6.5%, and the guys explain why rates need to dip closer to 6% to see substantial relief in the real estate market. Looking ahead, the group anticipates the Federal Reserve’s next move and examines the potential tone for 2025. While markets initially expected aggressive rate cuts next year, expectations have tempered, signaling caution and limited reductions as the Fed remains data-dependent. To close, the conversation touches on broader economic and political dynamics, including the potential for a “Santa Claus rally” post-Christmas and the implications of upcoming policies as the nation approaches a new president.

The Santa Claus Rally refers to the tendency for the stock market to experience a rise during the final trading days of December and the first few days of January. This seasonal phenomenon is often attributed to a combination of factors, including year-end tax strategies, holiday optimism, increased retail investor activity, and institutional investors closing their books for the year. While not guaranteed, the rally has historically been seen as a positive signal for market sentiment heading into the new year, providing investors with a boost of confidence during the holiday season.

In the second hour, the Money Wise guys explore RIA vs. Broker. You don’t want to miss the details! Tune in for the full discussion on your favorite podcast provider or at davidsoncap.com, where you can also learn more about the Money Wise guys or take advantage of a portfolio review and analysis with Davidson Capital Management.