22. Weekly Market Recap: Key Movements & Insights

⚖️ Rate Cut Reality Check: Markets Adjust to Fed's Mixed Signals

Stocks Waver as Rate Cut Optimism Fades

In a week marked by shifting monetary policy expectations, markets struggled to find direction. The S&P 500 declined 1.3%, bringing its year-to-date performance to -0.7%. Despite the index's impressive 78.5% gain over the past five years, recent market action suggests growing uncertainty about the Federal Reserve's rate cut trajectory.

The week began optimistically, building on the previous Friday's momentum. However, sentiment soured Wednesday following the release of December's FOMC minutes, which cast doubt on the timing and extent of potential rate cuts in 2025. The 20-year Treasury yield surpassed 5%, reaching levels not seen since late 2023. Markets were closed Thursday in observance of former President Jimmy Carter's passing, but Friday brought additional pressure as a robust December payrolls report further challenged rate cut expectations.