Thank you for joining me today for our 2024 market recap. There is a lot to celebrate this year as year 2 of the bull market was a great one. Through December 18th, Global markets were up just over 20% with U.S. large-cap companies once again leading the way. American exceptionalism was on full display across the board as both mid- and small-cap companies are up in mid and low teens respectively. International Markets once again lagged up mid-single digits whereas Emerging Markets did slightly better.
It wasn't as rosy on the bond front as the U.S. Aggregate index posted nearly flat returns. High yield bonds, or bonds issued by less fundamentally sound companies, are up around 8%, demonstrating the risk-on environment of 2024.
We attribute these outside returns to three key drivers: Investor sentiment, particularly around artificial intelligence, the Federal Reserve starting their rate cutting cycle, and corporate earnings coming in strong.
The Federal Reserve cut interest rates three times this year, coupled with the massive amount of A.I. investment, has led to an environment of optimism, resulting in stock market valuations expanding to levels approaching all-time highs. However, S&P 500 earnings also delivered, comfortably surpassing historical averages. Thus, the returns were not solely due to valuation expansion.
Bonds experienced a bumpier ride due to interest rate volatility not seen for quite some time. Long-term rates moved comfortably higher from where they began the year and with a lot of chop along the way. Short-term rates are where they began the year but noticeably lower from the peak this Spring.
Lastly, commodities posted a modest mid-single digit return, carried primarily by the return of gold.
We hope to see you next week for our 2025 Market outlook. For now, I hope these returns were another present under your tree.