I hope your start to the new year has been going well and that you made some special memories with your loved ones over the holidays.
As we step into 2025, I thought it would be beneficial to take a moment and reflect on what an extraordinary year 2024 was for investors.
[Not interested in market commentary? Skip to the postscript for a fun fact about 2025.]
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. 1
What were the factors affecting market performance?
One of the biggest drivers of this 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. 2
At the same time, U.S. economic growth outperformed expectations, with GDP expanding steadily throughout the year. 3 Consumer spending remained resilient, and despite lingering inflation pressures, the economy proved remarkably durable. 4
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. 5 Artificial Intelligence remained the defining theme of the year, capturing investor enthusiasm and driving valuations to historic highs. 6 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. 7 Meanwhile, geopolitical tensions and uncertainty around the Federal Reserve’s future policy decisions added volatility throughout the year. 8
What’s ahead for 2025?
Looking ahead to 2025, 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. 9
But as a financial advisor, my role is not to predict market outcomes—it’s to prepare and adapt our clients’ financial strategies no matter what 2025 brings. Whether it’s economic shifts, political changes, or market volatility, we’re here to help navigate it all.
Warmly,
Barry
P.S. 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.
P.P.S. Here’s a fun fact about the new year: 2025 is a rare perfect square year—it’s 45 squared. The last time this happened was in 1936; the next time won’t be until 2116. So, here’s to a mathematically special year ahead! 10
Sources:
1. AP News, 2024 [URL: https://apnews.com/article/stock-market-wall-street-tesla-nvidia-bitcoin-5e8bddd4ca301d66480249b41b4836ac]
2. Trading Economics, 2025 [URL: https://tradingeconomics.com/united-states/interest-rate]
3. Trading Economics, 2025 [URL: https://tradingeconomics.com/united-states/gdp-growth-annual]
4. Trading Economics, 2025 [URL: https://tradingeconomics.com/united-states/personal-spending]
5. Yahoo Finance, 2025 [URL: https://finance.yahoo.com/news/magnificent-seven-stocks-dominate-p-180221332.html]
6. Morningstar, 2025 [URL: https://www.morningstar.co.uk/uk/news/258865/tech-and-communication-stocks-drove-us-market-gains-in-2024.aspx]
7. US News, 2025 [URL: https://www.usnews.com/news/economy/articles/2025-01-13/inflation-worries-to-dog-the-fed-and-crimp-trumps-economic-agenda]
8. Federal Reserve, 2024 [URL: https://www.federalreserve.gov/monetarypolicy/fomcminutes20241218.htm]
9. Morningstar, 2025 [URL: https://www.morningstar.ca/ca/news/259217/2025-us-market-outlook–markets-are-priced-to-perfection-but-will-it-last.aspx]
10. MSN, 2024 [URL: https://www.msn.com/en-in/travel/news/significance-of-2025-why-perfect-square-2025-is-the-coolest-year-mathematically-speaking/ar-AA1wn3ZY]
Chart Source: Federal Reserve Economic Data, 2025 [URL: https://fred.stlouisfed.org/]
One of the biggest drivers of this 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. 2
At the same time, U.S. economic growth outperformed expectations, with GDP expanding steadily throughout the year. 3 Consumer spending remained resilient, and despite lingering inflation pressures, the economy proved remarkably durable. 4
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. 5 Artificial Intelligence remained the defining theme of the year, capturing investor enthusiasm and driving valuations to historic highs. 6 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. 7 Meanwhile, geopolitical tensions and uncertainty around the Federal Reserve’s future policy decisions added volatility throughout the year. 8
What’s ahead for 2025?
Looking ahead to 2025, 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. 9
But as a financial advisor, my role is not to predict market outcomes—it’s to prepare and adapt our clients’ financial strategies no matter what 2025 brings. Whether it’s economic shifts, political changes, or market volatility, we’re here to help navigate it all.
Warmly,
Barry
P.S. 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.
P.P.S. Here’s a fun fact about the new year: 2025 is a rare perfect square year—it’s 45 squared. The last time this happened was in 1936; the next time won’t be until 2116. So, here’s to a mathematically special year ahead! 10
Sources:
1. AP News, 2024 [URL: https://apnews.com/article/stock-market-wall-street-tesla-nvidia-bitcoin-5e8bddd4ca301d66480249b41b4836ac]
2. Trading Economics, 2025 [URL: https://tradingeconomics.com/united-states/interest-rate]
3. Trading Economics, 2025 [URL: https://tradingeconomics.com/united-states/gdp-growth-annual]
4. Trading Economics, 2025 [URL: https://tradingeconomics.com/united-states/personal-spending]
5. Yahoo Finance, 2025 [URL: https://finance.yahoo.com/news/magnificent-seven-stocks-dominate-p-180221332.html]
6. Morningstar, 2025 [URL: https://www.morningstar.co.uk/uk/news/258865/tech-and-communication-stocks-drove-us-market-gains-in-2024.aspx]
7. US News, 2025 [URL: https://www.usnews.com/news/economy/articles/2025-01-13/inflation-worries-to-dog-the-fed-and-crimp-trumps-economic-agenda]
8. Federal Reserve, 2024 [URL: https://www.federalreserve.gov/monetarypolicy/fomcminutes20241218.htm]
9. Morningstar, 2025 [URL: https://www.morningstar.ca/ca/news/259217/2025-us-market-outlook–markets-are-priced-to-perfection-but-will-it-last.aspx]
10. MSN, 2024 [URL: https://www.msn.com/en-in/travel/news/significance-of-2025-why-perfect-square-2025-is-the-coolest-year-mathematically-speaking/ar-AA1wn3ZY]
Chart Source: Federal Reserve Economic Data, 2025 [URL: https://fred.stlouisfed.org/]
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“Cheers to a new year and another chance for us to get it right.”
– Oprah Winfrey
– Oprah Winfrey