Market Volatility Hits Despite US Stocks' Strong Performance

For all the Trump trade triumphalism and hysteria for AI, it’s been a tough year to make money across markets. Now even the trade that powered US stocks is starting to show signs of wavering. A fickle Federal Reserve and inflation’s refusal to go quietly has been a recipe for cross-asset malaise. The biggest exchange-traded fund tracking long-dated Treasuries swung violently in 2024 before finishing deeply in the red. Commodities rode the hopes and dreams of Chinese stimulus, up and down.

Gains were even squeezed in the safest credits, where spiking yields pushed BlackRock’s $30 billion investment-grade ETF to its worst fourth quarter in eight years. The one bright spot was equities, and US companies again stole the show. The advance was the furthest thing from a uniform march, though—including Friday, when a normally sleepy year-end session saw the S&P 500 fall as much as 1.7 percent on no obvious news. That drop capped a year when value and small-cap shares struggled, and the S&P 500’s 25 percent return masked a gain of half that in its average member. Ominously, it was also the second shellacking in as many weeks for the one equity strategy that has worked reliably in 2024: momentum investing, or riding the market’s winners. A record year for momentum has rewarded its faithful handsomely—while also raising risk that blowups like Friday’s will become more common. “Momentum is great until it’s not, until something changes,” said Melissa Brown, head of applied research at SimCorp, which offers factor risk models. Even with this week’s pullback, the popular quant trade that buys the past year’s top names and sells the losers has gained 31 percent in 2024, set for the best year ever in data going back to 2002, a S&P Dow Jones index shows. In short, the stock leaderboard proved remarkably consistent, with Big Tech favorites like Nvidia Corp. and Meta Platforms Inc. sitting steadily at the to

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