Dear valued client,
I hope you all had wonderful Christmas celebrations.
** A reminder that RRSP season is around the corner. The deadline for contributions this year is March 3rd. **
Markets finished up slightly this week as 2024 was marked by significant global and domestic turmoil, with events that reshaped political and social landscapes. On the international stage, wars in Ukraine and the Middle East escalated, China amplified military drills around Taiwan, and political instability emerged in Europe as the French and German governments collapsed. In the U.S., political shocks included Joe Biden’s withdrawal from the presidential race and an assassination attempt on Donald Trump. Closer to home, Canada faced its own share of challenges, including a Canada Post strike, devastating wildfires in Jasper, immigration policy reforms, and a rising unemployment rate. Yet despite this turmoil, the S&P 500 surged nearly 30%, achieving one of its best annual gains this century, while the TSX climbed nearly 25%, its second-best performance in two decades. These gains were fueled by robust corporate earnings. Between 75% and 80% of S&P 500 companies consistently beat profit expectations, posting an average growth of 9.4% over the previous year. This profitability was largely supported by a significant slowdown in inflation, which allowed central banks to cut interest rates, encouraging borrowing and spending.
In the tech sector, the “Magnificent 7” once again showcased its dominance in 2024, albeit with a more moderate outperformance compared to 2023. While these companies collectively continued to capitalize on AI-driven growth, their returns this year outpaced the rest of the S&P 500 by 22%, down from a remarkable 62% margin last year. Nvidia led the charge with a staggering 182% gain, demonstrating resilience despite investor concerns and regulatory scrutiny. Amazon followed with a 50% rise, buoyed by record-breaking retail sales events and advancements in AI chip development. Meta Platforms soared 71%, benefiting from heavy investments in AI and potential TikTok-related tailwinds. Apple and Alphabet also posted strong gains of 34% and 40%, respectively, despite facing production adjustments and antitrust setbacks. Tesla surged 85%, recovering from earlier challenges with its Cybercab launch, while Microsoft’s 16% increase reflected the competitiveness of the AI sector. Overall, the Mag 7 reaffirmed their critical role in driving market performance, even amid a broader market rally.
The resilience of markets offers investors a valuable lesson in maintaining a long-term perspective.
“The stock market is a device to transfer money from the impatient to the patient.” – Warren Buffett
Have a terrific weekend and a Happy New Year!
PW
