Attached is the Maridea Quarterly Market Update for January 2025. This concise report offers a snapshot of key trends and insights shaping the current economic landscape. Here are the summary takeaways for this month:
- The U.S. economy has consistently defied expectations of a slowdown since the Fed started raising interest rates in March 2022. The U.S. economy grew at a +3.1% annualized pace in 3Q24, marking the third quarter in the past four with growth above +3%.
- The Fed continued its rate-cutting cycle in Q4, lowering interest rates by a total of -0.50%. The rate cuts were widely expected, but the big development in Q4 was the changing outlook for 2025. Despite the two rate cuts, Fed Chair Jerome Powell and other Fed presidents indicated they are not in a hurry to cut rates further.
- The S&P 500’s steady climb in 2024 reflects the market’s growing confidence. However, the equity market rally has made broad market indices like the S&P 500 more concentrated and more expensive. The S&P 500 currently trades at nearly 22x times its next 12-month earnings estimate, a level not seen outside of periods like the late-1990s tech boom and the recent post-COVID recovery, when interest rates were near zero.
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