US Equity Markets sold off meaningfully last week as the Fed tempered expectations for future rate cuts, and concerns around a possible government shutdown unsettled investors. The S&P 500 dropped 2.0% for the week to bring its gains for the year to 24.3%. The Nasdaq declined 1.8% and is now up 30.4% for the year, while the Russell 2000 (small cap stocks) tumbled 4.5% for the week to bring its gains for the year to 10.6%.
Global Equity Markets dropped last week as well, as the Fed's commentary around US interest rates reverberated overseas. Developed Markets were down 3.6% for the week and are now only up 1.0% for the year. Emerging Markets fell 3.1% for the week to bring its gains for the year to 4.7%.
US interest rates rose last week despite a Fed rate cut. As expected, the Fed lowered the Fed funds rate by 0.25% at its meeting last week, but they reduced their expectations for rate cuts in 2025 from 4 times to 2 times, citing healthy economic growth and sticky inflation. As a result, the yield on the US 10-Year Treasury increased to 4.52% from 4.40% the prior week, its highest level since May 2024.
Of Interest to Us
Equity markets are usually higher during the week of Christmas. Since 1999, the average return of the S&P 500 during the week of Christmas is 1.7%. Since that time, equity markets have posted positive returns during the week of Christmas 76% of the time.
Market Data
for the week ending 12/20/2024
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