2024 saw U.S. economic performance decouple from the other major regions. Looking ahead to 2025, investors should question whether the same drivers of performance will remain in play. Here are 3 things you need to know:

1. December was the worst month since April for the S&P 500 and the Nasdaq, as selloffs in tech stocks dragged the indices lower. Despite fizzling out in December, it was a record-setting year on Wall Street, with the S&P 500 clinching 57 all-time highs.
2. In December, the Fed’s latest “dot-plot” showed just two rate cuts of 25 basis points in 2025 instead of four indicated in September. The 10-year Treasury yield has risen 69 basis points to 4.56%, marking the fourth consecutive year of rising yields.
3. The U.S. dollar achieved its largest annual gain since 2015 last year, driven by a strong economy and anticipation of President-elect Donald Trump’s tax and tariff policies. The Bloomberg Dollar Spot Index rose 8% as the dollar advanced against major currencies.

Sources: J.P. Morgan Asset Management – Economic Update; Bureau of Economic Analysis (www.bea.gov); Bureau of Labor Statistics (www.bls.gov); Federal Open Market Committee (www.federalreserve.gov); Bloomberg; Deutsche Bank; FactSet.

Indices:

• The Bloomberg Barclays Aggregate Bond Index is a broad-based index used as a proxy for the U.S. bond market. Total return quoted.
• The S&P 500 is designed to be a leading indicator of U.S. equities and is commonly used as a proxy for the U.S. stock market. Price return quoted.
• The Russell 2000 Index is a small-cap U.S. stock market index that makes up the smallest 2,000 stocks in the Russell Index.
• The MSCI ACWI ex-US Index captures large and mid-cap representation across 22 of 23 developed market countries (excluding the U.S.) and 27 emerging market countries.  The index covers approximately 85% of the global equity opportunity set outside the U.S. Price return quoted.
• The MSCI Emerging Markets Index captures large and mid-cap segments in 26 emerging markets. Price return quoted (USD).

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