Knowledge Center
Market Currents – 12/17/24
- November Caps Off with a Strong Market Rally. U.S. equity markets posted their strongest performance of the year in November, buoyed by the decisive U.S. election outcome that eased a major source of uncertainty. This renewed sense of political stability supported broad-based gains across multiple sectors. At the same time, the Federal Reserve played a quieter role, lowering its benchmark rate for the second time in this cycle. The move, prompted by easing inflationary pressures, aimed to support economic growth while providing a cushion against potential global disturbances.
- Evolving Political Dynamics. With the Republican Party now controlling the White House and both chambers of Congress – though by a slim majority in the House – the conditions are set for more substantive legislative action. While campaign pledges often evolve during the transition to governance, unified government control typically increases the likelihood of significant policy advances. Key elements of President-elect Trump’s agenda – such as tax reforms, deregulation in key industries, and expanded energy initiatives – are broadly seen as supportive of economic growth. However, proposals involving stricter trade tariffs, large-scale deportations of undocumented immigrants, and the potential for mounting national debt could reintroduce inflationary pressures, and present considerable economic and policy challenges in the years ahead.
- Holiday Cheer Fuels Consumer Spending. Despite a shortened holiday shopping season, early data shows consumers embracing the festivities with solid spending. Shoppers remain highly deal-focused, prioritizing bargains, discounts, and promotions – a trend that continues to shape retailer strategies. CEOs from major consumer companies have expressed some optimism, pointing to steady demand and strong turnout during key shopping days. Beyond retail, leisure experiences are making a notable comeback: for the first time since the pandemic, moviegoers powered the U.S. box office to a record-breaking Thanksgiving weekend. Travel volumes also surged, reflecting a broader return to pre-pandemic holiday traditions and heightened consumer confidence. However, rising credit card debt and delinquencies underscore growing financial strain after years of elevated savings bolstered by pandemic-era government stimulus.
- Positioning for the Year Ahead. December is an opportune time to reflect on the past year. In many respects, 2024 mirrored the trends of 2023: it was a relatively tranquil period, free of pandemics, major Fed interventions, or unexpected economic shocks. Some growth concerns remain present, a resilient economy remained a defining theme. Stocks moved steadily higher, with the S&P 500 set to deliver a second straight year of solid gains – driven largely by advancements in artificial intelligence. These tech-driven tailwinds overshadowed lingering challenges, including election uncertainties, ongoing geopolitical tensions, and lofty valuations.
- As we set our sights on 2025, we remain cautiously optimistic. Long-term technology trends and potentially supportive policies are likely to continue shaping the market, while we remain watchful of Treasury yields, inflation (including potential impacts from tariffs and immigration policies), and valuations. With this balanced outlook, we maintain below-market exposure to high-flying tech names, favoring underappreciated companies with more reasonable pricing. Through it all, we avoid speculation or market timing, choosing instead to respond thoughtfully as new facts emerge. From all of us at Ascent, we wish you a joyful holiday season and a wonderful new year!