Happy New Year!
As we arrive at the end of another magnificent year, it is important to look back at what transpired in the financial markets in 2024. We want to thank you for your confidence and trust in us as we traversed through the ebbs and flows of the market this year. The financial markets have continued to be unpredictable and lively, offering potential for both upside and downside. Despite the uncertainty of the day-to-day fluctuations, your trust in our strategies and the dedication of our team empowered us to navigate these waters with stoicism and conviction. Your referrals continue to be the fuel that allows us to grow our community and clients, who share similar values and ambition. Words cannot describe how grateful we are to you all.
As our eyes shift to 2025, we remain focused on similar points that we had highlighted coming in to 2024. This being the forever impactful Fed, earnings, and a new player gaining momentum, AI stocks.
The FED:
The Fed cut rates three times throughout 2024. After 793 days of yield curve inversion, the longest period ever, it has un-inverted, which we view as a bullish indicator. Although the Fed’s hawkish December commentary may temper further rate cut expectations, we expect cuts to continue into 2025. They were projected to cut rates four times in 2025, at this time only two cuts are expected. (WSJ)
Technology and AI:
Tech stocks have run on their own cycle for two years now, with the “Magnificent 7” outgrowing the rest of the S&P by 30% in 2024. (FACTSET) Although tech has been growing exponentially, their growth gap to the S&P is expected to go from 30% down to 6% in 2025, meaning we could see some sideways action for the tech sector. With technology comes constant advancement, and that has brought AI to the front of the line. We are keeping a very close eye on the ecosphere of AI and the growth it could add to individual companies and the market as a whole.
Earnings:
Earnings for 2025 are expected to grow 14.8%, which is above the average annual rate of 8% over the last ten years. (FactSet S&P 500 CY 2025 Earnings Preview). ) Analysts are projecting earnings growth of 12.7% in Q1 of 2025, 12.1% in Q2 2025, 15.3% in Q3 2025, and 17% in Q4 2025. (FactSet Earnings Insight)
We still believe we are in a secular bull with many years left in its path. As with many things, if that changes, we will adjust. With any market, ups and downs happen, but we believe stocks are still in a long-term upward trend. Thank you for allowing us to be a part of your financial journey, we are deeply grateful. We hope 2025 is your best year yet!
Sincerely,
Williamson Wealth Management
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Williamson Wealth Management and not necessarily those of Raymond James. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
