Market Perspectives Q4 2024

As we close out 2024, our Chief Investment Officer, Kieran Osborne, offers key insights into the financial markets and economy. Here’s an overview of the market trends and economic outlook shaping the current investment landscape.

Insights from Q4 2024

As we move toward the holidays and the end of 2024, the market landscape presents both challenges and opportunities for investors. Mission Wealth’s latest market perspectives highlight key themes and actionable insights that can help guide our clients through this next year.

Stocks Strong This Year

Stocks have been supported by reduced inflation, the initiation of a Fed rate-cutting cycle, an increased likelihood of a soft-landing economic outcome, the reduction of political uncertainty, and earnings results that came in broadly ahead of expectations.

That said, a repricing of future Fed rate cuts has caused a recent uptick in volatility. Stock market concentration is at historic levels, and many large, mega-cap companies have stretched valuations relative to the remaining stocks in the S&P 500 Index.

Bond Yields More Attractive 

Bond yields have increased because of a more robust economic outlook, the potential for inflation to stay elevated over the near term, and the likelihood of a more measured approach to future Fed rate cuts. With that move, bond yields are relatively attractive, and bond prices may be supported if the Fed continues cutting interest rates (albeit at a more moderate pace).

Economic Update: Sustained Growth Ahead

The outlook for the U.S. economy has been revised higher and is expected to expand by 2.6% in 2024. The labor market has been resilient, and consumer spending has been robust. Economic data has recently surprised to the upside, and the economy is expected to grow above trend before moderating in 2025. Our base case is for a soft-landing economic outcome, with positive economic growth expected for the foreseeable future.

Investment Strategy: A Balanced and Disciplined Approach

While inflation remains above the Fed’s 2% target, it has improved, which may provide cover for the Fed to continue its rate-cutting cycle. The Fed considers current monetary policy as still restrictive but believes it is moving toward a more neutral policy. However, given the ongoing strength in the economy and upside data surprises, the Fed may take a more measured approach to future rate cuts.

Historically, a soft landing and a Fed rate-cutting cycle have been supportive for stocks. However, we are cautious about valuations, which appear stretched, particularly for select mega-cap names. Bond yields are attractive, with many of our preferred bond funds yielding mid- to high-single digits. Moving forward, we believe select alternative strategies offer attractive risk-adjusted return potential.

Download Our Market Perspectives

As we continue monitoring market developments, we focus on long-term fundamentals and disciplined investment strategies. By staying fully invested and avoiding the temptation to time the market, our clients are better positioned to achieve their financial goals, even in the face of short-term volatility.

At Mission Wealth, we are committed to guiding our clients through the complexities of today’s market with confidence and clarity. Our proactive approach ensures that our clients’ portfolios are resilient and poised to capitalize on opportunities that arise from market fluctuations.

We invite you to explore the full Quarterly Market Perspectives report for a deeper understanding of these market insights and their impact on your investment portfolio.