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The Week Ahead
Andre Borczuk
December 15, 2024
The Week Ahead
United States
The U.S. stock market continued its strong performance in 2024, with major indices reaching new all-time highs. The S&P 500 closed at 6,074.16, up 27.33% year-to-date[1]. The Dow Jones Industrial Average ended at 44,027.81, gaining 18.70% since the beginning of the year[1]. The tech-heavy Nasdaq Composite outperformed other indices, surging 31.18% year-to-date to 21,726.27[1].
Leading sectors driving the market's gains include:
Information Technology: +40.1% year-to-date[1]
Communication Services: +40.5% year-to-date[1]
Consumer Discretionary: +34.7% year-to-date[1]
Notably, Nvidia has been a standout performer, with its stock price soaring 192.13% year-to-date[1].
Canada
The Canadian stock market also posted strong gains in 2024. The S&P/TSX Composite Index reached an all-time high of 25,843.20 in December, representing a 21.97% increase since the beginning of the year[11].
Key sectors contributing to the TSX's performance include:
Financials: Royal Bank of Canada up 42.53% year-to-date[11]
Technology: Shopify surging 64.28% year-to-date[11]
Energy: Suncor Energy gaining 31.44% year-to-date[11]
Asia
Asian markets showed mixed performance, with some indices posting significant gains while others lagged:
Japan's Nikkei 225 rose 17.69% year-to-date to 39,385.32[10]
Hong Kong's Hang Seng Index increased 18.23% to 20,155.05[10]
China's Shanghai A Index gained 15.35% to 3,597.87[10]
South Korea's KOSPI Composite Index fell 8.01% to 2,442.51[10]
The MSCI China index outperformed, rising 18.60% year-to-date[10].
Europe
European markets also saw gains, although not as pronounced as their U.S. counterparts:
Germany's DAX index rose 0.2% for the week, ending at 20,426.3[4]
France's CAC 40 fell slightly by 0.1% to 7,420.9[4]
The UK's FTSE 100 edged up 0.1% to 8,311.8[4]
The European Central Bank cut interest rates by 0.25% as expected, with some officials pushing for a larger reduction due to economic challenges facing several European nations[4].
Commodities and Currencies
Commodity prices are projected to experience a slight downturn in 2024 and 2025 but are expected to remain above pre-pandemic levels[8].
Energy prices are forecast to decline by 3% in 2024, with lower natural gas and coal prices offsetting higher oil prices[8]
Agricultural prices are expected to ease in 2024 and 2025 amid improved supply conditions[8]
Metal prices are set to remain steady in 2024 before rising slightly in 2025[8]
In the currency markets:
The U.S. Dollar Index climbed 7.4% over October and November, marking its strongest quarterly performance since 2015[13]
The Euro faced significant pressure, with EUR/USD hitting two-year lows due to trade tensions and weak economic data[13]
The British Pound experienced volatility, with GBP/USD seeing its largest monthly price range in a year[13]
The Australian Dollar remained relatively stable compared to its peers, confined within its 2024 trading range of 0.6400–0.6900[13]
As we enter the final weeks of 2024, market participants will be closely watching for any developments in global trade tensions, central bank policies, and economic indicators that could impact asset prices across various markets.
Sources:
Federal Reserve Meeting Deep Dive
The Federal Reserve is widely expected to cut interest rates at its upcoming meeting on December 18, 2024. Here's an overview of the anticipated decision and key factors:
Rate Cut Expectations
A 25 basis point rate cut is highly likely, with markets pricing in a 97% probability[4][7]
This would lower the federal funds rate to a range of 4.25% to 4.50%[1][3]
It would mark the third consecutive rate cut since September, totaling a full percentage point reduction[3]
Rationale for the Cut
Inflation has made further progress toward the Fed's 2% objective, though it remains somewhat elevated[5]
Economic activity continues to expand at a solid pace, but job gains have slowed[5]
The Fed aims to balance maintaining a slightly restrictive monetary stance with the potential that policy may be nearing neutral[2]
Economic Outlook
GDP growth forecasts for 2024-2026 are expected to remain mostly unchanged around 2%[5]
Unemployment expectations may increase slightly, peaking at 4.4%[5]
Core inflation assumptions for 2024 and 2025 are likely to be revised downward[5]
Future Policy Considerations
The Fed is likely to adopt a cautious approach to future rate cuts[1][2]
Market expectations for rate cuts in 2025 have diminished[7]
Incoming economic data, particularly inflation reports, will be crucial for future decisions[6][8]
The Fed will need to assess the impact of the new administration's fiscal and trade policies[1][7]
Potential Challenges
Recent inflation data showed an uptick, which could complicate the Fed's decision-making[6]
The labor market remains resilient, potentially limiting the need for aggressive rate cuts[7]
Proposed tariffs and immigration policies by the incoming administration could affect inflation and economic conditions[6][8]
As the Fed navigates these complex economic conditions, its communication regarding future policy direction will be closely watched by market participants and economists alike.
Sources:
Notable Headlines & Summary
Cleveland's affordability and high rental property availability make it a top investment location for 2025
Tampa and St. Petersburg attract buyers due to economic growth, increasing demand for detached homes
Raleigh-Durham's job growth and favorable tax policies appeal to young families and potential investors alike
Century 21 CEO Mike Miedler predicts modest growth rates in the real estate market for 2025.
Recent declines in mortgage rates have sparked renewed interest among potential homebuyers, increasing mortgage applications.
The stabilization of price appreciation is critical but housing affordability remains a significant challenge moving forward, especially because it is unclear that mortgages will continue to decline
Redesign Health has raised $175 million to empower healthcare founders and foster innovation in the sector
The funding will support the launch of companies addressing critical healthcare challenges like labor shortages
Redesign Health aims to create significant social impact while generating financial value through healthcare advancements
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