Market Update
Stocks posted strong gains in January after losing ground in December. The gains likely reflected investor optimism that a second Trump administration will favor businesses, with the hope that the president-elect will take a more moderate stance on trade tariffs, although the White House intimated that tariffs may be in the offing for China, Canada, and Mexico. Ten of the 11 market sectors ended January higher, with the exception of information technology. Communication services, financials, and health care outperformed. Over the last 12 months, each of the market sectors showed positive results, led by communication services, financials, and consumer discretionary.
The S&P reported better-than-expected fourth-quarter earnings growth early in the reporting season. According to FactSet, the net profit margin for the S&P 500 was 12.1% for the fourth quarter, which is below the previous quarter's net profit margin but above the net profit margin from a year ago.
Industrial production expanded for the second consecutive month in December (see below). Manufacturing output, mining, and utilities increased for the month. Over the last 12 months, industrial production, mining, and utilities increased, while manufacturing output was unchanged. Purchasing managers reported manufacturing continued to slow in December as new orders decreased, while the rate of decline in production accelerated. On the other hand, the services sector grew higher in December, which saw strengthening of business activity and new orders.
International Markets
Canada's GDP rose 0.2% in December and 1.4% for 2024, buoyed by strong retail trade, manufacturing, and construction. As for inflationary pressures, Germany's annual consumer inflation rate dropped to 2.3% in January, a 0.1 percentage point from the December figure, as food and energy costs decreased. The annual inflation rate in the United Kingdom unexpectedly declined to 2.5% in December. The European Central Bank lowered interest rates by 25 basis points in January in response to easing price pressures. In January, the STOXX Europe 600 Index rose 6.2%; the United Kingdom's FTSE advanced 5.4%; Japan's Nikkei 225 Index fell 0.8%; and China's Shanghai Composite Index decreased 4.6%.
On A Personal Note
Jeff and Peggy went to Panama and enjoyed the warm (hot) temperatures. They got to see a couple of massive container ships through the canal, and thought it was an impressive sight. Drew and Stephanie celebrated “senior night” for their oldest daughter Abby’s basketball season. It was bittersweet to see her basketball career coming to an end after three years on varsity and all those tournaments and games over the years. Chris’s daughters went to see the Ohio State women’s gymnastics team compete against Michigan State. They were impressed and inspired by the abilities of college gymnasts. Lisa had a staycation the first week of January to relax from the holidays and recharge for the new year. Sam and Grace took a ski trip to Whistler in BC, Canada. They enjoyed a couple days of great snow on the mountain and had a blast exploring the village. Taylor has been setting up the nursery and going into “nesting” mode. Her cat Hopper thinks all the new stuff is for him!
Annual Charity Letter
A big thank you to everyone who called or emailed us to submit their favorite charity for our annual drawing! We cannot believe that it has been 13 years since we started this tradition. For those who don't know, every holiday season we put charity names that our clients have suggested to us in a random drawing, and Jeff, Chris, and Drew each pick one to donate to. This year, our team randomly drew the following charities: The Gary Sinise Foundation, Hawaii Foodbank, and Red Cross!
