The Fed’s role
At its meetings in September and November, the Fed implemented federal funds target interest rate cuts totaling 0.75%, with the possibility of another 0.25% rate cut in December. Despite the Fed’s actions, from mid-September to mid-November, the yield on the 10-year Treasury bond rose more than 0.80%, though in late November and early December, yields retreated.5
Will Trump administration initiatives alter Fed monetary policy moving forward? “Fed Chair Jerome Powell has made clear that Fed policymakers will wait for data and not engage in conjecture as they determine interest rate decisions,” says Haworth. “The market is beginning to assume that if the economy gets a boost from tax cuts, the Fed may scale back 2025 rate cuts.”
Considering broad opportunities
Anticipating continued solid economic growth, investors may wish to consider an equity overweight allocation, trimming fixed income positions within a diversified portfolio. “Our position is to own a globally diversified equity portfolio, not specifically focusing on U.S. stocks or particular sectors,” says Haworth. He believes that as 2024 ends, equity markets are well positioned. “It appears even though stocks have risen significantly for two years in a row, more upside potential remains.”
“We still think it’s a great time to be invested and for those with money in cash, it represents an opportunity to put capital to work in longer-term assets,” says Freedman. He encourages investors to view markets with a long-term lens. “Timing the markets and trying to be precise on when to be in and when to be out is challenging,” says Freedman. “Investors should be aware there’s a lot of noise. We urge clients to take a deep breath, go back to your plan. That will increase your odds of success.”
This is an important time to check in with a wealth planning professional to make sure you’re comfortable with your current investments and that your portfolio is structured in a manner consistent with your time horizon, risk appetite and long-term financial goals.
The S&P 500 Index consists of 500 widely traded stocks that are considered to represent the performance of the U.S. stock market in general. Diversification and asset allocation do not guarantee returns or protect against losses. The Russell MidCap Index provides investors with a benchmark for mid-sized companies. The index, which is distinct from the large-cap S&P 500, is designed to measure the performance of mid-sized companies, reflecting the distinctive risk and return characteristics of this market segment. The Russell 2000 Index refers to a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index.