Market Commentary - December 2024

Donald Trump was elected as the 47th President of the United States with a decisive Electoral College victory, including Republicans retaking the Senate and maintaining the House with a thin majority. Stocks surged post-Election and continued to November month-end setting several New All-Time Highs along the way. Markets calibrated expectations for lower taxes, deregulation, tariffs, corporate earnings, and economic growth.

Gains were strong and broad-based, continuing a second-half trend, and led by the small-cap Russell 2000 rocketing 10.8% for the month to finish +20.1% YTD and hit an intra-day record high, followed by the mid-cap S&P 400 jumping 8.7%, hit a record high, and closed November +21%. The Dow Jones Industrials surged 7.5% higher in November and closed the month at a record high of 44,911, up 19.2% YTD.   

The S&P 500 jumped 5.7% in November and closed above 6,000 for the first time ever, ending the month at a record high of 6,032, up 26.5% for the year. It was the S&P 500’s 48^th record high in 2024. According to YCHARTS, the S&P 500’s 1,000-point journey from 5,000 to 6,000 took just 9-months and 3 days, the shortest timespan ever. The tech-heavy Nasdaq surged 6.2% in November, closing at a record high 19,218 and up a leading 28% for the year. Large-cap growth has continued to dominate the markets in 2024 but the broadening of participation in November was welcomed, including large-cap value, and small- and mid-cap stocks noted earlier. The Dow surged 7.5% higher in November and closed the month at a record high of 44,911, up 19.2% YTD

Trailing 12-month returns are even more impressive, with Nasdaq gaining 35.1%, followed by the Russell 2000 +34.6%, S&P 500 +32.1%, and S&P Mid-Cap +31.3%, while the Dow has gained 24.9%. Past performance is no guarantee for future performance.

Overseas, developed and emerging market stocks fell for the second straight month, with the benchmark MSCI EAFE index slipping 0.7% while MSCI Emerging Markets dipped 3.7%; a stronger US dollar contributed partly to the losses. Modest year-to-date gains overseas for the MSCI EAFE and MSCI Emerging Markets of +3.6% and +5.4% respectively have paled in comparison to US markets, though trailing 12-months gains of +9% and +9.3% have been more solid and valuations remain attractive.  

The US economy remains solid; Q3 US Gross Domestic Product (GDP) grew at a solid 2.8% annualized pace, leading all developed nations globally, and the unemployment rate remained low at 4.1%, while the jobs market moderated. Leading manufacturing and service indicators rose in November, further supporting the soft-landing scenario. Q3 corporate earnings have exceeded 9% year-on-year expectations, with 75% of the S&P 500 beating estimates (JPMorgan, FactSet). Inflation in October came in as expected with CPI rising to 2.6% for the trailing 12-months, while the Fed’s PCE inflation gauge also edged higher, as expected, to 2.3% for the trailing 12-months and remains near its 2.0% target.  

Interest rates edged lower in November, despite a post-election bump up and after the Fed cut policy rates 0.25%, as expected,  following its November 6-7 FOMC meeting. The Fed noted the solid economy and continued progress toward its 2% inflation target, though inflation remains elevated. The benchmark 10-year Treasury Note yield dipped 0.10% to 4.18%; the Bloomberg Aggregate Bond Index rose 1.1% in November and finished +2.9% for the year. For the trailing 12-months, the benchmark is up 6.5%.

As we have advised this entire year, including right up to election day, investors should remain patient and disciplined and look beyond the election with their investment portfolios, regardless of the outcome. Whether your candidate(s) won or lost, we must invest over long-term time horizons which span presidential administrations, assess the risks and opportunities, and refrain from making emotional decisions along the way. That guidance remains the same going forward and as the New Year approaches.

December Update:

Stocks are mixed to begin December but Nasdaq and S&P 500 set fresh All-Time Highs in the first week. Interest rates have dipped further as expectations rose for another Fed rate cut at its December 17-18 FOMC meeting. Markets are expecting a Fed pause in January to start the New Year.

We continue to urge investors to remain disciplined and focused long-term with their investment portfolios as the markets continue to analyze and calibrate the election results for future Trump policy action going forward; we remain cautiously optimistic for year-end and for 2025 as well.

Stay tuned for our 2025 Outlook in January!

We continue to encourage investors:

• Remain well-diversified
• Maintain discipline and patience
• Focus on the long-term
• Review your Risk Tolerance

Call your Nelson Advisor today at 800-345-7593 to discuss any concerns and review your portfolio.

~Your Nelson Securities Team    

*Past Performance is No Guarantee for Future Results