It Keeps Going and Going and…

Last week, Justin highlighted the “turn-of-the-year trinity,” an article worth reviewing given some observations from this past week. Over the last week, United States equities appear to be repeating a theme of leadership. Broad United States equity indexes all exhibited positive returns, as the Russell 3000 rose 0.7%. Small caps increased 1.1%, while large caps advanced 0.7%. Outside the United States, equity markets were weaker as the MSCI All‑Country World Index ex-USA (ACWI x-USA) fell 0.7%. Emerging markets declined 1.4%, while foreign developed markets dropped 0.3%.

Year‑to‑date (YTD), the Russell 3000 has advanced 1.4%, as large caps rose 1.4%, while small caps increased 1.5%. Interestingly, while large cap value has outperformed large cap growth YTD (+2.1% versus +0.9%, respectively) within small caps growth has outperformed value YTD (+1.7% versus +1.4%). Foreign markets, in aggregate, lag the United States as ACWI x-USA has declined 0.4% YTD, primarily pulled down by the decline of 1.7% YTD in emerging markets which fully offset the modest gain of 0.1% YTD within developed markets.

Earnings Season Begins

We are in the midst of earnings season as companies are reporting for the fourth quarter 2024. According to London Stock Exchange Group (LSEG), 34 companies within the S&P 500 have reported earnings exhibiting year‑over‑year (YOY) growth of 42.4%. When considering estimates for companies yet to report, analysts project overall earnings will grow 10.7% YOY. Yesterday, major banks reported which fueled a rise in United States equity indexes across the board.

For the Russell 2000, 42 companies have reported earnings which exhibit a contraction of 2.6% YOY. When considering estimates for companies yet to report, analysts project overall earnings will grow 43.6% YOY.

Outside the United States, analyst expectations appear subdued relative to that of the United States. While 29 companies within the MSCI ACWI ex-USA index have reported earnings growth of 24.9% YOY, analyst estimates for companies yet to report project overall earnings will grow 4.3% YOY, materially lower than that of their United States peers.

On the Economic Front

Unemployment for December was reported last Friday, and private nonfarm payrolls rose 223,000 which exceeded consensus expectations of 136,500. Overall, nonfarm payrolls rose 256,000 versus consensus of 153,000. Hourly earnings rose 3.9% YOY, which outpaced inflation as the Consumer Price Index rose 2.9% in December.

Treasury yields declined given the perceived softening in underlying inflation implying that the Fed remained on course to cut interest rates this year. For the week, bonds rose 0.2% yet have declined 0.2% YTD.


Sources: BTC Capital Management, FactSet Research Systems Inc., London Stock Exchange Group PLC, FTSE Russell, MSCI, Inc.
The information provided has been obtained from sources deemed reliable, but BTC Capital Management and its affiliates cannot guarantee accuracy. Past performance is not a guarantee of future returns. Performance over periods exceeding 12 months has been annualized.

This content is provided for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Statements in this report are based on the views of BTC Capital Management and on information available at the time this report was prepared. Rates are subject to change based on market and/or other conditions without notice. This commentary contains no investment recommendations and should not be interpreted as investment, tax, legal, and/or financial planning advice. All investments involve risk, including the possible loss of principal. Investments are not FDIC insured and may lose value.

Mark Mandziara, Senior Managing Director - Equity

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