February was a tough month for U.S. markets. The S&P 500, Dow Jones, and Nasdaq all fell, with the Nasdaq getting hit the hardest. Despite the disappointing month, fundamentals showed signs of positive momentum, boosted by a strong jobs report and fourth-quarter earnings growth. Markets, however, still face real risks—including policy uncertainty, debt ceiling concerns, and the planned rollout of tariffs.

Brad here. As many of you know, I have been working on a much wider range of things here at Commonwealth, and as such, I have stepped back from a lot of the public-facing work I was doing. And that was fine as long as everything was going well. But when things become uncertain, we need someone to be able to explain what is happening—and why.

Markets rallied in January as improving fundamentals supported stocks. The S&P 500, Dow Jones, and Nasdaq ended the month in positive territory, and the story was similar internationally as developed and emerging markets rebounded. The healthy economic backdrop supported strong earnings results, and the solid labor market bolstered consumer confidence. While the market rally was welcome, investors still face real risks, including policy uncertainty with tariffs and potential market volatility.

The S&P 500 and Dow were both down in single digits in December, while the technology-heavy Nasdaq eked out a modest gain. Developed and emerging markets showed small losses during the month, and fixed income also had a weak end of the year. The central factor in these results was rising long-term interest rates, which hit valuations across the board. And although the Fed lowered interest rates in December, it indicated fewer planned interest rate cuts in 2025. 

When kids are young, they don’t ask for much—maybe a toy car or a new puzzle will keep them happy. But as they get older, the requests always seem to get bigger. Those toys and puzzles become more complicated video games, LEGO, or designer clothes and are invariably something we, the adults, never had as kids.

Markets rallied in November as investors poured into U.S. stocks following the 2024 election results. All three major U.S. indices ended the month in positive territory, with the S&P 500 and Dow showing record highs. While it was a great month for U.S. investors, international stocks ended down, and developed and emerging markets fell. On the economic front, personal spending and retail sales growth came in strong, and service sector confidence rose to a two-year high.

From beginning to end, the 2024 election cycle will be looked back on as historic. It was hard fought and contentious on both sides. But at the end of the day, polls and political pundits don’t decide elections—voters do.

Markets were down in October across the board, with stocks falling at month-end. Bonds also dropped as traders dialed back expectations for Fed rate cuts. This pullback was largely due to signs of surprisingly strong economic growth, as solid hiring and rising confidence drove consumer spending growth.

In the most recent Bank of America Global Fund Manager Survey (October 2024), managers were asked what they considered the biggest “tail risk.” Their answer: geopolitical conflict. So, if you’ve been thinking about geopolitical risks and their potential effect on portfolios, you are certainly not alone.

“The wind is rising, and the air is wild with leaves. We have had our summer evenings; now for October eves!”
— Humbert Wolfe