Wealth Capital Markets Review Q4 2024

Every quarter, our Asset Management & Trust team delivers a Capital Markets Review to help keep you apprised of the latest economic news and trends. You can find key highlights from our Q4 2024 report, as well as the full report below.
Inflation has followed a remarkable trajectory since the pandemic, reflecting the complexities of a shifting economic landscape. Suppressed by deflationary pressures during the 2020 lockdowns, it surged in 2021 due to fiscal stimulus, supply chain disruptions and labor shortages, peaking at 9.1% in mid-2022. This was followed by a steady decline, with headline Consumer Price Index (CPI) dropping below 4% by mid-2024. However, the latter half of 2024 saw disinflation stall. In November, headline CPI rose 0.3% month-over-month and 2.7% year-over-year, driven by base effects while core inflation remained steady at 0.3% month-over-month and 3.3% year-over-year, highlighting persistent challenges.
Report highlights:
- ECONOMY: The U.S. economy expanded at an annualized rate of 3.1% in the third quarter of 2024, compared to 3.0% in the second quarter. This growth was supported by a strong consumer base, low unemployment and continued progress toward the 2% inflation target. The acceleration in real GDP in the third quarter was primarily driven by increased exports, consumer spending and federal government spending.
- EQUITY MARKETS: As of December 31, 2024, large-cap stocks, as measured by the S&P 500, returned 25.02% year-to-date, the S&P Mid-Cap 400 returned 13.89%, and the smaller company stocks, as measured by the Russell 2000 Index, returned 11.54%. International stocks had positive results too, as the MSCI Europe Asia Far East (EAFE) Index returned 4.43%, and Japan's Nikkei 225 Index returned 21.27%.
- FIXED INCOME: The Federal Reserve continued its rate-cutting move by trimming funding rates 25 additional basis points to close out 2024. As we know, traders have been anticipating more cuts to come as we move into the new year. Markets are beginning to reevaluate that forecast at present. The updated forecast looks more likely for only 50 basis points in cuts over 2025 as opposed to 100 at the end of September consensus.
- ASSET ALLOCATION: Our portfolios remain broadly diversified with exposure to large and smaller companies, value and growth issues, and domestic and international equities. Within equities, in early 2025 we plan to reduce our international exposure while reallocating the proceeds to holdings of midcap growth companies. These slight changes are due to the strengthening of the U.S. dollar and expectations for lower U.S. federal regulations and lower taxes. With respect to fixed income allocation, we prefer high-quality agency securities in the five-to-six year maturity range. Given that corporate spreads remain historically low, we would wait for better opportunities in the sector for the time being.
This review is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the review. The review is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.
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