Wednesday begins the fourth week of 2025, and although a tremendous amount of information has made it through the news cycle – particularly relating to the tragic wildfires in California, and President Trump taking office as the 47th U.S. President – we wanted to take one final moment to reflect on what an extraordinary year 2024 was for investors.
Despite persistent concerns about the economy, inflation, and political uncertainty, the stock market delivered an impressive performance. The S&P 500 surged over 23%, marking back-to-back years of gains exceeding 20% – a feat we haven’t seen since the late 1990s.
What Were the Factors Affecting Market Performance?
One of the biggest drivers of last year’s market success was The Federal Reserve’s shift to lower interest rates after years of aggressive tightening. Although rate cuts were gradual and fewer than anticipated, they provided meaningful support to market momentum. Mortgage rates dipped, borrowing costs eased, and hopes grew for a ‘soft landing’ rather than a recession.
At the same time, U.S. economic growth outperformed expectations, with GDP expanding steadily throughout the year. Consumer spending remained resilient, and despite lingering inflation pressures, the economy proved remarkably durable.
Of course, not all sectors shared equally in the market’s success. Technology stocks dominated the headlines, with the so-called “Magnificent Seven” – companies like Nvidia, Microsoft, and Apple – leading the charge. Artificial intelligence remained the defining theme of the year, capturing investor enthusiasm and driving valuations to historic heights. Yet, as the year progressed, we saw broader market participation, with other sectors beginning to share in the rally.
Political and geopolitical events also influenced the year. Markets experienced volatility following the presidential election, initially surging on optimism before tempering gains as concerns about potential inflationary pressures emerged. Meanwhile, geopolitical tensions and uncertainty around the Federal Reserve’s future policy decisions added volatility throughout the year.
Related: Post-Election Market Outlook: Navigating Trump’s Economic Policies
What’s Ahead for 2025?
Looking ahead, we’re entering a year of change and uncertainty. After such a significant market run, expectations for continued outsized gains are more tempered. Analysts are cautiously optimistic, forecasting more modest market growth this year.
While we can not predict market outcomes, we can help clients prepare and adapt their financial strategy. No matter what 2025 brings – whether it’s economic shifts, political changes, or market volatility – our team of financial advisors remain available to help you navigate it all.
Please remember that this commentary reflects broad market trends and performance. Individual portfolio results will vary depending on factors like risk tolerance, asset allocation, and investment strategy. If your results don’t mirror these market highs, that’s perfectly normal – and it doesn’t necessarily mean your portfolio isn’t performing as it should.
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Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.