SMID Cap Portfolio Review - January 2025
February 13, 2025
Stocks were volatile in January, responding to numerous market-moving developments but ultimately closing in positive territory. After a weak December, stocks initially rose in the first week of January on optimism about President-elect Trump’s pro-business policies. They then fell mid-month after stronger than expected economic data, as well as the potentially inflationary impact of President Trump’s policies, led some to wonder whether the Fed’s anticipated two rate cuts would come to fruition in 2025. The bond market also sold off, with the 10-year US Treasury yield reaching 4.79%, its highest yield since October 2023. But a subsequently favorable Consumer Price Index inflation reading, which showed a decelerating trend, surprised the market, leading to a rebound in bond prices and a strong rally in US equites. By January 24th, the S&P 500 index had risen to 2025’s first all-time high.
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