In Markets "In a Nutshell"

Markets “In a Nutshell” for December 23, 2024

Investment Week at a Glance

Stocks finished lower for the week. The Dow Jones Industrial Average fell 2.3%, the S&P 500 was down 2.0%, and the NASDAQ fell 1.8%. Foreign stocks (MSCI EAFE) were also down, falling 3.6%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.53%.  (Data source: Wall Street Journal)

Fed Cuts Rates

The Federal Reserve had its last meeting of 2024 and delivered another 0.25% rate cut. This rate cut was expected by markets but what markets had not priced in was the Fed projecting only 2 rate cuts in 2025. This sent markets lower and yields higher as it looks like we will see higher rates than expected going forward. The Fed pointed to inflation and the unknown of tariff policy as to why they adjusted their projections from 4 rate cuts down to 2 in 2025. Despite this, Fed Chair Powell reiterated that the U.S. economy is strong and “in a really good place.”

Market Volatility

Markets have had a relatively smooth ride higher this year and there is no surprise that we had some volatility as we head into the end of the year. Domestic equity markets all remain ahead double digits for 2024, and we have avoided a market correction (decline of 10%) so far which is common to see once a year. Another reason market volatility may continue throughout the next few weeks is investors may be taking profits, rebalancing, and selling off their losers to offset the gains (tax-loss harvesting). All of these are short-term worries and as we look at the market long-term expectations remain strong as the economy continues to grow with the Fed predicting 2.1% GDP growth in 2025, an increase from their last forecast in September.

Nordstrom To Go Private

Nordstrom will become a private company as Nordstrom’s founding family and El Puerto de Liverpool will buy the company for $6.25 billion. Shareholders will receive $24.25 of cash per share and the deal is expected to close in the first half of 2025. This deal comes as Nordstrom has had a strong 2024 but has still not fully recovered from Covid as the stock is down over 40% from its pre-Covid levels. (CNBC)

Quiz:

How much cash does Berkshire Hathaway have?   (Scroll Down for Answer)

  1.     $193 Billion
  2.     $248 Billion
  3.     $285 Billion
  4.     $325 Billion

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

 

 

Answer:

4.   $325 Billion. Warren Buffett and Berkshire Hathway have amassed a pile of cash, and many are wondering what the plan is. Some believe Buffett doesn’t see any attractive investment while others think he is planning a large acquisition. 2025 could give us the answer to what Buffett is planning for.

 

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