Market Commentary
2024 was another stellar year for U.S. equities, with the S&P 500 climbing approximately 25% and the tech-driven, AI-fueled Nasdaq surging over 29.6%. This marked the best two-year stretch for equities since 1997-1998. The market’s strength was bolstered by solid economic growth, declining inflation, Federal Reserve rate cuts, and strong corporate earnings. The AI boom further amplified gains in major technology stocks, with the “Magnificent Seven” driving much of the market’s upward momentum, while the Russell 2000 and the remaining 493 S&P 500 stocks struggled to keep pace.
Global markets continued to underperform their U.S. counterparts, adding to America’s equity dominance. However, valuations in U.S. markets have reached historically high levels, sparking concerns about sustainability and the risk of corrections. Adding complexity to the outlook, a new administration will take office on January 20, bringing promises of structural change.
Despite these risks, credit markets remain tight, signaling resilience, though the U.S. government bond market faces headwinds from increased spending and the refinancing of long-term debt, driving up borrowing costs. While optimism prevails, these dynamics underline the challenges ahead as markets assess the balance between growth opportunities and fiscal realities while a new administration enters the White House with big plans for change.
Advice Corner
Check out our 4th Quarter 2024 articles on the retirement spending smile, debt payment strategies, leaving an estate, annuities, and educating the next generation on investing.
- The Retirement Spending Smile: What It Is & How It Affects Your Future – This concept refers to retirees’ spending and consumption patterns as they proceed through their retirement and what this means for our retirement strategies. Read our article for more about this phenomenon and how to keep it in mind as you plan for your future.
- Putting Debt on Ice: Debt Payment Strategies – The average person’s debt takes many forms. It can include credit cards, auto loans, mortgages, school loans, and personal loans. So, what’s the best way to manage and chip away at your debt? Click the link to learn about debt payment strategies and which may be the best option for you.
- Where There’s a Will, There’s a Way: Leaving an Estate – The day will come when you are no longer living. During this time of grief, the last thing your loved ones will want to worry about is money and executing your will. The goal is to have the transfer process be as frictionless as possible—and that’s where effective estate planning comes in. Find out more.
- The Good, the Bad & the Ugly of Annuities – You’ll likely come across annuities as you evaluate your retirement savings options. While annuities guarantee retirees an income stream, they can also come with higher costs and limitations. Let’s explore the pros and cons of this retirement vehicle.
- Educating the Next Generation on Investing – Investing basics and financial planning are both important topics to learn—but unfortunately, not always the most glamorous. As with so many areas of finance, you can never start too early! Try to pique the interest of your kids and young adults in some of the essential topics in our article.
For more information, contact the Carlson Team today!
Carlson Investments does not provide tax, legal, or accounting advice. This content has been written for informational purposes only. Always consult your individual tax, legal, or financial professionals for advice tailored to your situation.
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