Q4 2024 Market Commentary: A Year-End Rally Caps Off a Robust Year 

As we closed the books in 2024, the financial markets have delivered an impressive performance, defying early-year skepticism and rewarding patient investors. The fourth quarter saw a continuation of the year’s positive momentum, with major stock market indices reaching new heights and the broader market participation expanding. We’re reminded that steering away from the negative noise and staying focused on long-term goals is the best of all strategies. Remember “time-in-the-market, versus, timing-the-market” allows for your investments to grow through every market environment.  

Q4 Performance Highlights 

• S&P 500: +2.1% 

• Dow Jones Industrial Average: +0.5% 

• NASDAQ Composite: +6.2% 

These Q4 gains contributed to remarkable full-year returns: 

• S&P 500: +23.3% 

• Dow Jones Industrial Average: +12.9% 

• NASDAQ Composite: +28.6% 

Key Drivers of Q4 Performance 

Several factors propelled markets higher in the final quarter: 

1. Federal Reserve Policy Shift: The Fed’s 50 basis point rate cut in September, followed by additional cuts in Q4, signaled a pivot towards a more accommodative monetary policy.
2. Economic Resilience: Despite earlier recession fears, the U.S. economy demonstrated continued growth, albeit at a moderated pace.
3. Broadening Market Rally: While tech giants led gains earlier in the year, Q4 saw increased participation from cyclical and defensive sectors, including utilities, real estate, industrials, and financials.
4. Inflation Moderation: The PCE price index, the Fed’s preferred inflation measure, approached the 2% target, supporting the case for further rate cuts.
5. Strong Corporate Earnings: Profit growth remained robust, underpinning investor confidence.

 

Looking Ahead: Opportunities and Challenges 

As we enter 2025, several factors warrant attention: 

1. Monetary Policy: The Fed is expected to continue its rate-cutting cycle, potentially supporting economic growth and asset prices. This should drive down mortgage rates but also bank savings rates. A sound strategy for your cash savings is important.
2. Political Landscape: A new Congress and new Administration may influence market sentiment, with potential implications for taxes, regulations, and trade policies. We’re watching all of it!
3. Geopolitical Tensions: Ongoing global conflicts could impact market stability and supply chains. The unknown here could be a challenge for the market and something we will need to be ready and reactive toward.
4. Stock Price Concerns: With stock prices near historical highs, there’s potential for increased volatility if fundamentals don’t meet expectations. We’re watching company earnings!
5. AI and Technology: The AI narrative continues to drive innovation and investment, particularly benefiting the tech sector. 

Conclusion: Maintaining Perspective 

The strong performance of 2024 serves as a reminder of the benefits of long-term investing and the unpredictability of short-term market movements. As we look to 2025, maintaining a diversified portfolio aligned with your long-term financial goals remains crucial. While optimism prevails, investors should be prepared for potential volatility as markets navigate evolving economic conditions and geopolitical landscapes. 

 

ONE ADVISOR TWICE THE ADVICE^TM

Learn more about how this relates to your current financial plan? Give us a call at (410) 823-5442 or email invest@peakeadvisors.com.

Chesapeake Financial Advisors is a fee-only financial planning, investment advisory, and tax planning firm with offices in Towson, Columbia, and Frederick, Maryland.

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