Santa Rally Fades, But Equities Rebound Late

While some sectors were strong during the period, the S&P 500 failed to deliver a "Santa Rally" this year.

Breadth continues to be an issue for equities as the number of stocks out-pacing the trend remains poor. Though the percent of stocks in the S&P 500 trading above their respective 200-day and 50-day moving averages rebounded on Friday, the numbers are still well below average. Bond yields continue to climb, which poses a risk to equities. However, it's typically a mistake to "fight the tape" as they say. Most economists and forecasters get it wrong when trying to guess the final return for markets by year-end.

With that being said, there are several challenges for equities in the New Year.

Despite rate cuts by the Fed in 2024, the 30-year mortgage rate has crept back up to 6.91% and the 10-year Treasury Yield has risen nearly 100 basis points since the Fed first began cutting. That poses a risk to consumer spending as certain elements of inflation remain high. The latest outlook for 4th quarter GDP by the Atlanta Fed dropped from 3.1% the previous week to only 2.4% last week. In addition, the S&P 500 tends to be lower in a year followed by more than 50+ all-time-highs in a calendar year, lower in the 1st year of a GOP presidency, and lower in year 3 of a Bull Market cycle. Given low volatility last year, we could see more volatility in 2025.

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Disclosures

The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.

Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.

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