Key Events: Conflicting data
This week’s economic data was mostly positive: Small business optimism rose above a key level, while inflation met expectations, and growth remains solid.
Inflation, though, remains high and, paired with increased unemployment claims, brought fears of stagflation to the investment dialogue.
Market Review: Tech gains but losses elsewhere
Outside of technology, virtually all asset classes sold off – bonds did not like inflation data and small stocks reacted to stagflation fears. New China stimulus drove emerging markets higher.
Outlook: Santa Claus rally to usher in a strong ‘25?
Policy and growth expectations have led the markets higher since Trump was elected. As we close out the year and begin to think about 2025, we are reminded that momentum has been the biggest return driver in 2024 [1]. This has been justified by strong corporate earnings, technological advancements, and economic growth. Investor cheer may lead to a “Santa Claus rally” in the last few days of the year and leading into the new year[2].
However, there are valuation concerns as large technology stocks are trading at historically high valuations, suggesting gains may not be sustainable.
While the market's momentum has been impressive, it is essential for investors to consider the potential for the market to correct – we see some technical weakness in some areas of the market.
We urge investors to maintain their enthusiasm but balance it with prudence, focusing on discipline as we navigate the complexities of the coming year.
Can Trump and Elon deliver a Santa Claus rally? [3]
This material is intended to be educational in nature,[4] and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. OneAscent can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.
[1] Source: Bloomberg
[2] Source: Wikipedia
[3] Source: Microsoft Co-pilot
[4] Source: Market Returns reference the following indices: Large Cap – S&P 500, Mid Cap Growth – Russell Midcap growth, Mid Cap Value – Russell Midcap Value, Small Cap – Russell 2000, Developed – MSCI EAFE, Emerging – MSCI Emerging Markets, Aggregate – Bloomberg US Aggregate, High Yield – Bloomberg High Yield
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