Market Commentary Archives

by Jared Plotz, Director of Research

Just like that, the pendulum swings the other way. Equity and fixed income markets both moved higher this week as inflation readings came in cooler than expected. The start to fourth-quarter earnings reports was positive, as was news of a ceasefire deal in Gaza. The S&P 500 rose +2.9%, while the Nasdaq increased +2.5%. Major stock indices are now up year to date. The 10-Year Treasury, an interest rate indicator, closed the week at 4.62%, down -14 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, was largely unchanged.

This week brought key inflation readings for December. The Consumer Price Index (CPI) rose 3.2% from a year ago on a “Core” basis (ex-food/energy), a slower pace than expected and versus November. The producer equivalent (PPI) rose 3.5% on a similar basis. Meanwhile, retail sales for December rose 3.9% from a year ago, softer than economists forecasted. This suggests the economy and consumer spending, while solid, may not be overheating. The cooler inflation readings engendered a reprieve in interest rates along with more sanguine inflation commentary from Federal Reserve members. All of these signals aided Preferred securities.

The Big Banks kicked off the fourth-quarter reporting season with positive results this week. The group showed an improvement in interest margins and earnings, while noting strong investment banking and trading activity. The index comprising bank stocks rose 8% on the week.

Taiwan Semiconductor – not a portfolio holding, but the largest contract manufacturer of Nvidia’s advanced chips – jumped higher after laying out an expectation for its AI revenues to double this year and grow at a 40% clip over the coming five years. This is an encouraging sign for our AI positions, like Nvidia. Minnesota-based United Healthcare’s report showed profits above expectations. Though shares fell as investors remain concerned over the trend of higher healthcare costs, the company’s growth expectations remained consistent for 2025.

Next week, we, and the markets, will be closed on Monday in observance of Martin Luther King Jr. Day. Since the economic calendar will be light, corporate earnings will set the tone for the market. Many regional banks, as well as healthcare and transportation companies, are on the docket. An upbeat tone is likely.

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.

by Jared Plotz, Director of Research

Markets, both equities and fixed income, moved lower this week. Fears of a resurgence of inflation were stoked by a hotter (i.e. stronger) jobs report in addition to rhetoric on tariffs and percolating concerns of a rising US fiscal deficit. The S&P 500 fell -1.9%, while the Nasdaq fell -2.3%. The 10-Year Treasury, an interest rate indicator, closed the week at 4.76%, up +16 bps from last week. The 6-Month US Treasury, a favorite of our US Treasury strategy, ended up +2 bps at 4.30%.

Economic data was strong this week. One measure of business confidence reached an 18-month high and showed “new orders” for services expanding at the fastest pace in nearly three years. Job Openings (JOLTS) for December were higher than expected, with over eight million vacancies – a sign that businesses are looking to hire. Friday’s monthly employment report showed that the US added 256,000 jobs in December – 100,000 more than expected – while the unemployment rate ticked down to 4.1%. A stronger labor market is often viewed as one contributor to inflation and a reason for the Federal Reserve to be less aggressive lowering benchmark rates.

Speaking of the Federal Reserve, many members echoed an opinion this week that the inflation fight is not yet done. This is partly attributed to the most recent uptick in inflation readings and employment/wage growth. However, according to the group’s minutes from its last meeting, it also originates from the impacts of potential changes to government trade and immigration policy. The rise in interest rates this week was led by a combination of stronger economic data and a Fed that is less confident in the speed at which inflation will return to its 2% target.

In stock portfolio news, Nvidia CEO Jensen Huang confirmed that Blackwell systems (the firm’s newest chip line) are in full production and the company is seeing expanding use cases, including into robotics. Meanwhile, Microsoft announced they would spend $80 billion over the next year building AI-enabled datacenters. While we believe the AI wave still has a long runway ahead of it, we are actively considering trims to our AI position weights over the coming weeks to manage overall exposures.

Next week brings the start to fourth-quarter earnings reporting by companies. The big banks will give us the early look starting Wednesday. On Tuesday, the PPI inflation report for December will be released, with the CPI report out on Wednesday. Both will be watched closely to determine whether the recent uptick may be the start of a broader reacceleration in prices.

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.

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.

by Jared Plotz, Director of Research

It proved to be a very quiet week. Equity markets rose ahead of the Christmas holiday and then drifted lower afterwards. The S&P 500 ended the shortened week up +0.67%, while the Nasdaq rose +0.76%. The 10-Year Treasury, a rate indicator, closed the week at 4.62%, up +9 bps from last week. The 6-Month Treasury, a favorite of our US Treasury strategy, ended up +1 bp at 4.30%. Preferred securities were pressured by the rise in long-term interest rates, with the 10-Year yield up +45 bps since November. However, we still expect that if inflation can remain manageable and the Federal Reserve reduces short-term rates, long-term rates will follow lower, a potential benefit to Preferred securities next year.

Consumer Confidence, measured by the Conference Board, weakened in December, though survey participants noted tamer expectations of inflation with a weaker job outlook. In line with the latter outlook, weekly continuing unemployment claims were the highest in three years. Official job openings data for November won’t come for a couple weeks, but indicators suggest fewer available positions. Given the Federal Reserve’s dual mandate of promoting stable prices and maximum employment, a looser job market would give weight on the balance towards rate cuts.

More notable headlines came from outside the US, with China’s industrial profits falling harder than anticipated and another presidential impeachment in South Korea. Lawmakers in South Korea voted to impeach the acting president after impeaching the prior president less than a month ago. Meanwhile, a big merger of steel companies hangs in the balance, as President Biden weighs whether to block Japan’s Nippon Steel from acquiring U.S. Steel.

Wall Street activity will be slowed again by the New Year’s Day holiday next week. The markets, and our office, will be closed Wednesday. Economic readings and regulatory decisions will again be rather quiet as the December jobs report gets pushed to the following week. Happy New Year from all of us at UIA!

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.