Daily market snapshot

Published February 14, 2025
 Woman on couch looking at laptop

Friday, 02/14/2025 p.m.

  • Markets end the week higher, despite uncertainty – Despite uncertainty around tariffs and inflation, stock markets finished the week higher. The S&P 500 gained 1.5% for the week, while the tech-heavy Nasdaq was up about 2.6%*. Treasury yields headed notably lower on Friday, as retail sales figures for January came in below expectations. This was in part due to devastating wildfires in Los Angeles and severe winter weather elsewhere, which may have weighed on consumption activity. The U.S. 10-year Treasury yield is now around 4.48%, well below its January high of about 4.8%*. More broadly, however, markets remain comfortably higher for the year thus far, with the S&P 500 up about 4%, and the Dow Jones index up nearly 5%*. In our view, the positive market returns reflect an economy that continues to remain resilient and show signs of momentum, even in the face of policy uncertainty.
     
  • Positive drivers of the economy: GDP growth and earnings – In our view, the fundamental backdrop remains supportive, which underpins this bull market. Economic growth has been resilient – the Fed's GDPNow forecast, for example, points to a healthy 2.9% annualized economic growth rate for the first quarter of 2025* – a good sign that momentum is continuing in 2025. And corporate earnings continue to deliver. About 77% of S&P 500 companies have reported fourth-quarter earnings, and earnings growth is on pace for 16.4% year-over-year, the highest since 2021*. We see corporate earnings growing double-digits in 2025 as well, driven by contributions from both growth and value sectors, which should support sentiment and stock-market returns. 
     
  • Diversification remains a key theme for 2025: Overall, after two years of solid gains in stock markets, and low volatility during this period, we would expect to see moderation in returns and increased market volatility ahead. However, we continue to see positive economic and earnings growth. And while tariffs and trade remain uncertain, we don't see them pushing the economy into a downturn. In addition, pro-growth policies, like deregulation and lower taxes, may be next on the agenda for the U.S. administration. Thus, we believe investors can use market pullbacks as opportunities to diversify, rebalance and add quality investments at potentially better prices across stock and bond markets. Diversification, in our view, will be a key theme in the year ahead. Diversified portfolios not only help avoid too much exposure to any one asset class that may be at risk, but they also help maintain returns when certain parts of the market are outperforming. These could include investments in both large-cap and mid-cap stocks and in investment-grade bonds, as well as across growth and value sectors.
     

Mona Mahajan
Investment Strategy

Source: *FactSet 
 

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This is for informational purposes only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation. While the information is believed to be accurate, it is not guaranteed and is subject to change without notice.

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