2024 In Review

For the second year in a row, the stock market was up significantly in 2024. The S&P500 ended the year up 25%, the Dow was up 15% and the NASDAQ was up 27%. Notable drivers in the stock market were technology up 35.7%, communication services (includes Facebook, Alphabet), consumer discretionary 29.1%, and financials up 28.4%.

The bond market eked out a gain of 1.3% based on the Bloomberg Aggregate index. Bank loan notes, high yield, and emerging markets debt outperformed.

As the inflation rate began to subside from the 9% peak seen in 2021, the Federal Reserve hiked rates from 0.25% to 5.5% over two years in order to bring inflation down. It wasn’t until this year that the Fed felt that inflation was headed in the right direction and began lowering rates in September with a half percent cut on the Fed Funds rate from 5.5% to 5% and made two more ¼ point cuts to end the year at 4.5%.

The 10-year began the year with a yield of 3.9%, surged to 4.7% in April, went down to 3.7% in September and ended the year at 4.6% for a net change in yields of +.7%. As yields rise, prices of bonds decrease, which is why the Bloomberg Aggregate Bond Index rose only 1.3% in 2024, with interest on bonds more than covering the price loss.