2024 Year in Review

1/13/2025 - By Chris Stennett

As 2024 passes, it’s time to reflect on the key themes that shaped this eventful year. Geopolitical uncertainties, lingering effects from COVID-19, the U.S. presidential election, and debates about a hard versus soft economic landing kept investors on edge at the year’s outset. Yet, alongside the challenges, there were significant opportunities for growth. Here’s an overview of major developments in U.S. and international markets and their broader implications.

U.S. Stocks: A Broader Rally Takes Hold

U.S. stock markets saw another remarkable year, marked by an expansion beyond the narrow tech-driven gains of 2023. While the "Magnificent 7" tech giants dominated the prior year, 2024’s rally broadened to include a wider range of sectors and companies, leading to strong overall growth.

This 2nd consecutive year of +20% market gains alleviated some inflation concerns and rewarded investors who maintained diversified portfolios. However, those who favored cash faced growing anxieties as wage growth struggled to keep up with rising prices and investment returns.

International Stocks: Gains Amid Global Uncertainty

The global stage was rife with geopolitical tensions and economic challenges in 2024, yet international markets delivered positive results:

Developed Markets (Ex-U.S.): Steady performance led to returns of 4.7% for the year.
Emerging Markets: Despite heightened volatility, emerging markets outpaced developed markets, achieving an impressive 7.5% return.

For globally diversified investors, these returns reinforced the value of maintaining an international presence in their portfolios, even during uncertain times. Notably, these gains exceeded inflation, offering real value to investors.

Interest Rates: A Return to Normalcy

After nearly two years of an inverted yield curve (Short-term rates yielding more than Long-term), interest rates began to normalize in 2024. The 10-year Treasury yield rose above short-term rates, signaling improved economic health.

Short-term rates declined from 5.25% to 4.5%, leading to lower yields on cash and similar alternatives.
10-year Treasury yield climbed from 3.9% to 4.6%, reflecting increased confidence in the long-term economic outlook.

Inflation: Stabilizing but Still a Challenge

Inflation showed signs of stabilization, decreasing from 3.1% in January 2024 to 2.7% by December. Although this represented progress toward normalcy, the elevated cost of goods and services continued to challenge consumers. The lingering effects of the higher inflation rates seen in 2022 remain a key concern for many households.

Employment: A Resilient Job Market

Despite a slight uptick in unemployment from 3.7% to 4.2%, the labor market demonstrated resilience throughout 2024. Job opportunities remained robust, reflecting a strong overall economy, even as certain industries experienced isolated pressures.

Key Takeaway: Overcoming Inflation’s Legacy

Over the past three years, inflation has been a dominant challenge for American households. However, investors who maintain course with a diversified portfolios of stocks and bonds saw their wealth grow at a pace far exceeding inflation. This year reaffirmed a time-tested lesson: safely utilizing risk assets like investments, and staying invested though volatile times, is crucial for long-term financial success.

For individuals leery of the stock market, the primary challenge continues to be keeping pace with inflation. The task of growing wealth either by wages alone, or with some alternative investment plan like real-estate has proven to be inconsistent.

A Message from Saltmarsh

At Saltmarsh, we take pride in helping our clients navigate the challenges and opportunities every year. Our commitment to building and preserving financial security has never wavered. While uncertainty remains, we believe that a well-diversified portfolio, regular planning, and disciplined rebalancing are the most effective tools for managing risk and achieving financial goals.

If you or someone you know needs help navigating today’s economic realities, we encourage you to reach out. Together, we can develop a financial plan tailored to your unique needs and aspirations.

Here’s to a prosperous 2025 and beyond!