As 2024 comes to a close, markets defied expectations. The S&P 500 soared 23%, driven by the “Magnificent Seven” tech giants, while fixed income disappointed, gaining just 1% amid shifting Fed rate expectations. Strong corporate earnings (+9.4%) and a resilient labor market helped power equities, but concentration risk in the index is growing.
Looking ahead to 2025, we maintain a cautiously optimistic outlook. Inflation continues to moderate, the Fed may cut rates, and fixed income could rebound later in the year. However, with no market correction since 2022, volatility is likely, though the bull market appears intact.
For investors concerned about buying at market highs, history shows that staying invested through uncertainty often produces stronger returns. As always, diversification, discipline, and long-term focus remain key to navigating both challenges and opportunities in the year ahead.