Weekly Market Update for January 3, 2025

by Jared Plotz, Director of Research

An upbeat Friday capped off what was a “no-show” by the seasonal Santa Rally – in fact, major stock indices declined five straight trading days surrounding the turn to the New Year. Friday’s bounce helped the S&P 500 end the shortened week down just -0.48%, while the Nasdaq fell -0.51%. The 10-Year Treasury, a rate indicator, closed the week at 4.60%, down -2 bps from last week. The 6-Month Treasury, a favorite of our US Treasury strategy, ended down -2 bps, at 4.28%. Preferred securities improved this week as pressures from the recently rising long-term rates eased.

As we look ahead towards what 2025 may have in store, it’s always worth revisiting where we have been. 2024 turned out to be another banner year for the equity markets, despite low expectations entering the year. Major Wall Street strategists, as a whole, predicted the S&P 500 would end the year either at a loss or an ever-so-slight gain. Instead, the S&P 500 Index rose 23.3%, on top of a 24.2% gain the year before.

Within fixed income, the S&P Preferred Stock Index rose more than 9% in 2024, despite a rise in long-term interest rates, as the 10-Year US Treasury rose 69 basis points (0.69%). Inflation did come down through the year, and, as the Federal Reserve shifted towards reducing short-term rates, the yield curve “steepened” (i.e. short-term rates moved below long-term rates – typically good for the economy). Amidst these shifts, UIA’s flagship strategy, Intelligent Fixed Income, vastly outperformed its benchmark, as did our principal equity strategy.

Looking forward, even though equity markets notched their second consecutive 20%+ return, we still see reasons to remain optimistic for 2025. We will save the underlying drivers for our quarterly piece, but we will note here that not all stock performance was the same in 2024. The markets were led heavily by the largest companies in the technology sector. The equally-weighted S&P 500 index – a better representation of the average stock in the market – was up a more modest 11% this past year. If market leadership can broaden further from the mega-sized tech companies to other pockets of the economy, this could provide additional support to the major indices.

News flow picks up next week. On Tuesday, we will get the JOLTS job openings for November. On Wednesday, we will read the Federal Reserve’s minutes from their December meeting. Equity markets will be closed on Thursday in recognition of the National Day of Mourning for former President Jimmy Carter. Then on Friday, the jobs report for December will be released. Economists are expecting payrolls to rise by 155,000 positions.

As we enter this bright new year, we request clients remain diligent when clicking on links in their personal emails and texts, or when entering passwords. Our firm’s custodian of client assets recently highlighted active “phishing” campaigns that attempt to compromise personal data.

Have a great start to 2025 this weekend!

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.