What We Learned This Week

Tech-Fueled Gains Pushed the S&P 500 to a Strong 2024: Despite some late-year stumbles, the S&P 500 wrapped up its best two-year stretch in decades, finishing 2024 up 23% with 57 record closes. Tech, particularly AI-driven enthusiasm, was the dominant driver, with Apple, Meta, Microsoft, Nvidia, and Tesla accounting for more than 53% of the index’s gains—Nvidia alone contributing 21%. While sectors like financials, utilities, and industrials also posted solid returns, it's likely that even these were buoyed to some extent by the broader lift from AI momentum. Heading into 2025, a more balanced market performance would be healthy to see as investors navigate an environment that may not offer the same tailwinds.

Looking ahead, the backdrop appears more challenging. Enthusiasm around cooling inflation and rate cuts may have been premature, as the Fed signaled a more cautious approach to policy easing, and inflation remains sticky. Prolonged elevated rates could weigh on lofty tech valuations, making further multiple expansion harder to justify. At some point, earnings growth will need to take over to sustain upward momentum. AI spending remains a major wildcard—while the sector has shown no signs of slowing, ROI questions will eventually come into focus, potentially separating winners from losers. That said, the U.S. economy remains relatively stable, providing a strong foundation despite uncertainties. As always, surprises are inevitable, but maintaining a long-term perspective and staying ready to seize opportunities will be key in navigating what’s to come.

Boeing 737 at the Center of Another Tragic Crash: The Boeing 737 is once again in the spotlight following a tragic crash involving a Jeju Airlines flight in South Korea, resulting in 179 fatalities—one of the deadliest aviation disasters in recent memory. Initial reports suggest the aircraft issued a mayday call citing a potential bird strike before attempting an emergency landing without deploying its landing gear. The plane skidded off the runway and collided with a wall, leaving only two crew members alive. Investigators have recovered the black boxes, and all major manufacturers and suppliers connected to the aircraft are participating in the investigation.

This incident adds to the scrutiny Boeing faces, especially concerning the 737 model, and predictably led to a sell-off in the stock. However, the aircraft was over 15 years old and had operated without issue during that time, making it unlikely the investigation will uncover a new design or maintenance defect. While other factors, such as operational or environmental issues, are likely contributors, Boeing’s history ensures heightened investor caution. For now, this event serves as a reminder of the company's fragile reputation, but it likely doesn’t warrant a significant change in its long-term outlook.