Market Decode: Can the markets get their sizzle back?

2024 was a strong year for the markets, with the S&P 500 rising 23%, but the index fizzled in December. What can investors expect next?

 

RECORDS WERE BROKEN in all three major indexes in 2024 — but that sizzling pace fizzled in the last month of the year, with the S&P 500 declining 2.5%.1 Volatility continued into the first month of 2025, driven by strong economic data that caused economists and investors to rethink the number of potential future interest rate cuts.

“Rising long-term bond yields, sticky inflation and a stronger-than-expected January jobs report have dampened investors’ hopes for new Federal Reserve rate cuts,” says Lauren Sanfilippo, senior investment strategist for the Chief Investment Office (CIO), Merrill and Bank of America Private Bank. In fact, BofA Global Research now believes the Fed will keep rates on hold this year. Despite this recalibration, there are reasons to remain optimistic about stocks in 2025. In the above video, Sanfilippo highlights several of them.

 

For more insights, read the CIO’s January Viewpoint, “Fizzle to Sizzle,” and tune in regularly to the CIO's Market Update audiocast series.

 

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1Bloomberg, December 31, 2024.

 

Important disclosures

 

The opinions expressed are as of 1/15/2025 and are subject to change.

 

Investing involves risk, including the possible loss of principal.

 

Past performance is no guarantee of future results.

 

The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).

 

BofA Global Research is research produced by BofA Securities, Inc. (“BofAS”) and/or one or more of its affiliates. BofAS is a registered broker-dealer, Member SIPC and wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).

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