Stocks Gain, Bonds Continue Decline in Holiday Shortened Week

Good morning!

The Dow (+0.35), NASDAQ (+0.78), and S&P 500 (+0.70%) all experienced moderate gains for the week.  This week was rather light in terms of trading volume due to the holiday-shortened week.  Meanwhile, bonds declined for the third week in a row, as taxable bonds dropped 0.33% and tax-free municipal bonds fell 0.01%.  The 10-year Treasury yield climbed 0.09% to close the week at 4.62%.

Carryover from the Fed decision to cut rates by 0.25% the prior week was limited as many traders closed the books on a mixed 2024. Many money managers will report solid gains for the year, but still lag the major indices due to being light on the Magnificent Seven stocks. You can see this when looking at the MAGS ETF, an ETF comprised of the Magnificent Seven stocks, where that fund is up +66% year-to-date whereas RSP, an S&P 500 equal weight ETF, is up +13%. While the gains are certainly attractive, being overly concentrated in just a few stocks can be risky and we continue to recommend a diversified investment strategy.

Initial jobless claims fell to 219,000, which is a level indicating solid employment, but claims that continued beyond the first week rose to their highest level since November 2021. This shows that while employers aren't quick to lay off workers, they are hesitant to add new employees.  In yet another holiday shortened week, we will see the bond market close early on Tuesday and both the stock and bond markets closed on Wednesday for the New Year. On Thursday and Friday, we have the release of the Initial Jobless Claims Report and the ISM Manufacturing Report which will give further indication to the overall health of the US economy.

Have a great day and a terrific week. From all of us here at Menninger & Associates, we wish everyone a Happy New Year!

_{Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.}

_{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}