Market Update for Q1 2025

Welcome to 2025. We hope that everyone had a wonderful holiday season and a great new year.

As we wrapped up 2024 we wanted to provide you with a recap of the 4^th quarter activity in the markets and economy. As you know, the markets are always changing, and we want you to know that the team here at FinancialCop is keeping an eye on things for you.

The U.S. economy and stock market finished strong in the 4^th quarter of 2024. The S&P 500 Index finished the year 25% higher than it began, and it hit all-time highs 57 times during the year. For the second year in a row, the market gained over 20%, which hasn’t happened since the late 1990s[1]. This surge was influenced by investor confidence in economic initiatives proposed by the incoming administration and an economy that continues to grow due to declining inflation. The government’s goal is to keep inflation at or near 2% annually. We ended the year at a 2.9% increase, but that is a great improvement from where we were just two years ago at 8.3%[3]. As of this now, the Fed has indicated that it plans to hold interest rates steady in the short term, but pressure from the White House could result in more rate cuts throughout the year.

Looking ahead, forecasts suggest that the U.S. economy will continue to expand, with several economist predicting a potential growth rate of 2.3% in 2025. Inflation is on track to potentially normalize toward the Federal Reserve’s 2% target by the middle of 2026. While there is always the potential for market volatility, the strong fundamentals observed in the fourth quarter of 2024 provide a solid foundation for future economic stability and growth.

So, bottom line, what does this mean for our portfolios? Well, a robust economy is what we want to see. When business is good investors are more confident, and the market tends to grow. Growth in the market results in growth in our portfolios. Nevertheless, there are always things that can’t be predicted that happen to our markets. As many of you know, investing is a roller coaster, with all of its ups and downs. At FinancialCop, our philosophy is to keep using sound, fundamental strategies when it comes to investing and that includes changes to our investment philosophy as data comes in throughout the year.  The markets are a rollercoaster ride sometimes, and those that stay on are usually rewarded.  As Paul Harvey once said, “The only people who get hurt on a roller coaster are the ones who jump off.”

As always, we are here if you have any questions about not only the markets, but also your portfolio, risk tolerance or any major financial decision you may be faced with. Reach out anytime and we are happy to jump on a call or schedule a meeting to go more in depth to help you. We are always monitoring the markets and how they affect things, and our investment team is consistently evaluating what adjustments, if any, need to be made based on market conditions, good or bad!

[1] RPA 4^th Quarter Update.

[2] https://www.philadelphiafed.org/surveys-and-data/real-time-data-research/spf-q4-2024.

[3] https://www.statista.com/statistics/273418/unadjusted-monthly-inflation-rate-in-the-us