As we look back on the fourth quarter, markets held up reasonably well in an environment that presented both strengths and challenges. The S&P 500 Index posted a modest gain as investors favored steadier areas of the market, with healthcare delivering notably strong performance late in the year. Even with the longest government shutdown in history disrupting economic data and adding to uncertainty, solid corporate earnings helped keep equities on a steady upward path.

Economic activity continued to grow but at a slower pace. Real Gross Domestic Product was estimated at just above one percent, and the labor market showed clearer signs of cooling, especially in technology and media where layoffs became more common. We are monitoring the recent rise in layoffs tied to the adoption of AI, which is becoming an increasingly important factor in both labor market conditions and overall economic activity. The Federal Reserve implemented two quarter point rate cuts to counter a cooling economy, and steady spending among higher income households continued to provide a meaningful source of support.

 

 

Wells Fargo Advisors did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Wells Fargo Advisors or its affiliates. Past performance is no guarantee of future results.