CIO Monthly Observations - January 2025
Markets in Review
The S&P 500 dropped 2.5% in December, after rising sharply the prior month, leaving the full year gains at an impressive 23.3%. The MSCI All Country World index also fell, shedding 2.45% for the month, which brought its year-to-date return to 15.7%. The Bloomberg Bar Cap U.S. Aggregate Bond index dropped during the last month of the year by 1.6%, reducing its year-to-date gain to 1.25%.
The stock market fell for most of the month, despite another Federal Reserve rate cut, as they signaled there would be fewer rate cuts going forward, and investors began worrying about high valuations for the largest technology companies, which had led the market to all-time highs this year.
Monthly Highlights
The Fed cut rates by 25 bps, but they signaled fewer rate cuts next year A CEO was gunned down in Manhattan in a targeted attack
Stocks dropped in the last week of the year, led by the largest tech firms
News in Review
The Federal Reserve cut rates by 0.25%, as expected, but surprised the market by projecting only half as many cuts next year (2 vs 4) as it had indicated at their prior meeting. The stock market fell as much as 3% at one point, before recovering some of its losses, but the change in tone has had an impact. Fed Chair Powell himself said that they were entering a “new phase” and markets will need to prepare for the current interest rate levels to stay higher for longer – with only an additional 0.5% of cuts likely – for the next 12 months.
UnitedHealthcare CEO Fatally Shot in Brazen Targeted Attack
A healthcare CEO was gunned down in broad daylight in midtown Manhattan – shot multiple times in the back and in his legs – in an apparent ambush that had been planned ahead of time. The killer was able to flee the scene that day, but was eventually caught. Based on the words he had inscribed on the bullets that killed the CEO, it was apparently an attempt to draw attention to health insurance practices, which the killer despised.
Stocks Rocked by Late-Week Swoon in Tech Giants
The stock market sold off during the last week of the year, taking some of the froth out of a market which had risen over 25%, before giving back some of those gains. Much of the selling was concentrated in the largest companies in the S&P 500 index (which are some of the largest companies in the world), potentially signaling some profit taking as the “Magnificent Seven”, large tech companies, were responsible for more than half of the indexes gains in 2024.
NORAD’s Santa Tracker is 70 Years Old, but Millions of Kids Still Love it
Every December NORAD operates a website that tracks Santa Claus as he travels around the world and they also run a live call center for children to phone in and ask questions. It makes a lot of children happy and it’s been running for close to 70 years now – ever since a little boy saw a Sears advertisement encouraging children to call Santa in 1955. He apparently misdialed the number and was connected with an Air Force colonel who picked up the emergency-only “red phone” and heard the child reciting a Christmas wish list. The quick-thinking colonel played along and the rest is history.
DISCLOSURES
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