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Markets began 2025 with optimism fueled by expectations of tax cuts and deregulation. However, sentiment shifted as the Trump administration pursued tariffs on key trading partners, raising concerns about growth and triggering a pullback in equities.

Equity markets rose during the final quarter of the year, fueled by expectations of pro-growth policies under the incoming Trump administration, along with ongoing hopes for lower interest rates and optimism for companies exposed to artificial intelligence.

The third quarter of the year saw heightened volatility for markets, driven by labor market data, profit growth linked to artificial intelligence, and anticipation for the Federal Reserve’s first rate cut since the early days of the pandemic.

Mega-cap technology companies continued to drive the equity market to record highs during the second quarter as enthusiasm for artificial intelligence and expectations for lower interest rates overshadowed concerns over softening economic data.

After ending 2023 on a high note, the market continued its advance in the first quarter against the backdrop of strong economic data and corporate earnings that surpassed expectations.

As we head into 2024, it’s noteworthy just how much sentiment has changed compared to this time last year. The labor market continued to add jobs and consumer spending remained surprisingly resilient in the face of higher prices, all while inflation continued its downward trend.

After a strong first half of the year, financial markets took a breather in the third quarter as restrictive monetary policy, combined with a still-robust economy, put upward pressure on bond yields and downward pressure on stock prices.