December 1, 2024
As 2024 draws to a close, it is a good time to reflect on the past 11 months. Overall, stocks have held up better than expected following the Federal Reserve’s interest rate increases to combat inflation. A combination of tracking back towards the 2% inflation rate and concerns about a softer labor market set the stage for the Fed to kick off an easing cycle in September with a larger 0.5% cut, its first rate cut in four years.
In the wake of the election, markets moved higher on the hopes of a deregulatory agenda and the possibility of corporate tax cuts.
Although we still do not have a normalized yield curve with lower rates on the short end and higher rates on the long end, we keep an eye on the 10-year Treasury yield. If yields continue to increase it could put pressure on stocks. A general consensus is it would take a 10-year yield in the 4.5% - 5% range for stock investors to feel uneasy. Yields increasing over concern for the deficit is bad; however, yields increasing due to expectations of better growth is a good reason.
While uncertainty is always present, unforeseen geopolitical events can have an impact on the market. Growth has proven to be more resilient than expected. If corporate earnings continue to accelerate and the Federal Reserve continues to ease monetary policy, holding and investing in quality, growing investments is a rational way to invest for long-term financial success.
The yield on the 10-year Treasury note is currently at 4.25%, while the yield on the two-year Treasury yield is at 4.19%. Year to date the major indices are positive with the Dow, S&P 500, and NASDAQ all ahead 19.16%, 26.47%, and 28.02%, respectively.
We wish you and your loved ones a safe and healthy Merry Christmas and a Happy New Year!
*Disclaimer: This report is a publication of Marchand Faries Financial Management, Inc. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgement of the author as of the date of publication and are subject to change.
