Fourth Quarter Market Recap: A Look Back at the Markets and Portfolios Performance
As we say goodbye to 2024 and step into the new year, it’s the perfect time to reflect on how the North American markets closed out the year. After an impressive third quarter, I was hopeful that the momentum would carry into the fourth—and while it wasn’t a fireworks finish, the markets held steady. All four major indexes – the Toronto Stock Exchange Composite Index (TSX), the S&P 500 Index (S&P), the Dow Jones Industrial Average (DJIA), and the Nasdaq Composite Index (Nasdaq) – posted gains, with the Nasdaq leading the charge, gaining even more steam, while the others navigated a mix of challenges and opportunities.
While we missed out on a classic “Santa Claus rally,” the markets showed impressive resilience. 2024 shaped up to be another remarkable year, driven by explosive growth in artificial intelligence (AI), the first interest rate cuts in over three years from both the Bank of Canada (BoC) and the US Federal Reserve (Fed), and the strength of a robust American economy.
My three portfolios also had a solid fourth quarter. They got off to a slow start but caught fire midway through the quarter. Unfortunately, the Grinch made a late appearance and stole some of the joy from those gains after a red-hot November.
While the fourth quarter had its share of ups and downs, the scale tipped more toward the positives, with the indexes and the portfolios finishing higher than where they started (exactly what we want 😊). As 2025 approaches, let’s take a quick look at the key factors that shaped the markets and how the three portfolios performed during the quarter.
Fourth Quarter Portfolio Update
Fourth Quarter Review
For the fourth quarter, the TSX (SPTSX) added 3.0%, the S&P (SPX) gained 2.1%, the DJIA (INDU) advanced 0.5% while the Nasdaq (CCMP) surged 6.2%.
The stock markets closed out 2024 with a flourish, as all four major North American indexes posted gains in the fourth quarter. It wasn’t a smooth ride, though—October’s strong start was overshadowed by a sharp pullback at month’s end. November showed promise but didn’t deliver the ‘Santa Claus rally’ at the end of the year as many had hoped for, with indexes trimming gains at the end of December. Still, the overall quarter was a win for investors, showcasing the resilience of both markets and the economy.
Here’s how the major indices performed:
- S&P: Up 2.1%, driven by an 11.7% year-over-year jump in earnings per share (EPS), reflecting strong corporate health.
- DJIA: edged up 0.5%, benefiting from robust corporate earnings and economic strength.
- Nasdaq: Continued its upward climb, rising 6.2%, fuelled by tech dominance and surging demand for AI-driven solutions.
- TSX: Gained 3.0%, bolstered by strong performances in energy and materials sectors, a weaker Canadian dollar, and falling interst rates.
What Powered the Markets in America?
The fourth quarter’s strong performance was underpinned by several key drivers. Corporate earnings exceeded expectations, highlighting the resilience of American businesses even before rate cuts began to take effect. The Fed’s two interest rate reductions, including a bold 0.5% cut, signaled growing confidence that inflation was under control. These moves reassured investors and encouraged spending by making borrowing cheaper.
Meanwhile, the US presidential election brought Donald Trump back to the White House, sparking a post-election rally as markets welcomed his pro-business policies. The tech sector’s dominance continued, driven by innovation in AI, with giants like Nvidia (NASD: NVDA), Apple (NASD: AAPL), Amazon (NASD: AMZN), Meta (NASD: META), and Microsoft (NASD: MSFT) leading the charge. Broader market participation also played a role, as investors rotated into small-cap and value stocks, expanding the rally beyond AI. Globally, stabilizing economic conditions and easing monetary policies (lower Interst rates) provided additional support, while inflation, though still present, posed less of a drag compared to earlier in the year.
The Canadian Story
The TSX ended 2024 with a solid 3.0% gain for the quarter, reflecting a mix of domestic and international factors. The BoC’s two interest rate cuts during the quarter gave a significant boost to economic activity and investor sentiment. At the same time, a 3.6% decline in the Canadian dollar, partly due to tariff threats from US President-elect Donald Trump, made Canadian exports more competitive.
Key sectors like energy and basic materials thrived, supported by rising commodity prices and robust global demand. Additionally, improving domestic economic indicators and strengthening business sentiment helped sustain the rally. The TSX’s performance highlighted how interconnected global events and local policy decisions shape the Canadian market, setting a promising tone for 2025.
As we bid farewell to 2024, the fourth quarter’s performance highlights the relentless climb of the markets and the dynamic factors shaping their trajectory. From corporate earnings exceeding expectations to the tech sector’s relentless innovation and the impact of rate cuts on economic activity, the past three months have been a masterclass in how interconnected forces drive investment opportunities. Here’s to carrying this momentum into a prosperous and exciting 2025! 😊
Fourth Quarter Portfolio Update
The line chart below illustrated the path each portfolio performed throughout the fourth quarter of 2024, capturing their overall progress.
This next chart compares the performance of the portfolios and indexes at the end of the quarter.
Next, you’ll find summaries of each portfolio’s monthly highlights, accompanied by a bar chart showcasing their individual performance throughout the quarter.
Portfolio 1 for the fourth quarter: UP 
Portfolio 1 had an impressive fourth quarter, starting strong in October and November before facing headwinds in December.
October belonged to Nvidia, which hit an all-time high and drove gains in four out of five weeks. The Trade Desk (NASD: TTD) and Celestica (TSE: CLS) also contributed, but Nvidia was the clear standout.
November kept the momentum going, with Amazon, Visa (NYSE: V), and Walmart (NYSE: WMT) hitting record highs. Shopify dazzled with a 22% gain in one week, and indie Semiconductor soared 63% for the month. Even a 16% drop from Innovative Industrial Properties (NYSE: IIPR) and a late-month 5% dip in Nvidia couldn’t derail the portfolio’s gains.
December, however, saw declines as concerns over inflation, steady interest rates, and potential US policy shifts – including tariffs on Canadian imports – took a toll.
Despite the December slowdown, the fourth quarter was a strong one overall, highlighting Portfolio 1’s ability to deliver standout gains and hold its ground in the face of challenges.
Activity:
Received: shares of Tourmaline Oil (TSE: TOU) as part of their acquisition of Crew Energy.
Sold: Lightspeed Commerce (TSE: LSPD), Rivian Automotive (NASD: RIVN), Boston Omaha Corporation (NYSE: BOC).
Portfolio 2 for the fourth quarter: UP
Portfolio 2 had an eventful fourth quarter, with highs, lows, and a few surprises.
October started rocky, with a loss, a mid-month rebound, and two straight declines to close. Despite some bright spots, no stock or sector stood out enough to push the portfolio into the green.
November was a different story. Guardant Health (NASD: GH) soared 28% in a week, while iA Financial Group (TSE: IAG) and Dollarama (TSE: DOL) hit all-time highs. Weekly wins powered the portfolio to steady growth for the month.
December reversed that momentum, with Portfolio 2 posting its largest drop of the quarter. Concerns about stubborn inflation, stagnant interest rates, and uncertainty over US policies – including potential tariffs on Canadian imports – took their toll, surprising for the portfolio known for its balance and stability.
Despite December’s struggles, November showcased Portfolio 2’s ability to thrive under favourable conditions – a reminder of its growth potential even amid challenges.
Activity:
Bought: Zoetis (NASD: ZTS).
Bought additional share in: Dollarama, Microsoft, Brookfield Infrastructure Partners L.P. (TSE: BIP.UN), Whitecap Resources (TSE: WCP).
Received: shares of South Bow Corp. (TSE: SOBO) as part of South Bow being spun off from TC Energy (TSE: TRP); shares of Tourmaline Oil as part of their acquisition of Crew Energy.
Sold: some shares of The Bank of Nova Scotia (TSE: BNS)
Portfolio 3 for the fourth quarter: UP
Portfolio 3 had an eventful fourth quarter, after a slow start in October, it surged in November and cooled off in December.
October kicked off with three straight weeks of gains, but momentum slipped in the final weeks. Lithium Americas (TSE: LAC) stood out with back-to-back gains of 18% and 15%, helping the portfolio finish the month in the green.
November was the portfolio’s standout month, outperforming its peers and the broader markets. Shopify (TSE: SHOP) led with a one week gain of 22%, while Vertiv Holdings (NYSE: VRT) surged 18% during the month to hit an all-time high. With consistent wins across most holdings, Portfolio 3 wrapped up November with impressive returns.
December saw momentum fade, as concerns over inflation, steady interest rates, and concerns over possible US policy changes – including potential tariffs on Canadian imports – led to declines.
Despite December’s slowdown, fourth quarter demonstrated Portfolio 3’s strong growth potential, especially when key holdings perform. It’s a resilient portfolio with room for future gains.
Activity:
There were no transactions in the fourth quarter.
Looking Forward
With the fourth quarter of 2024 in the books, we’ve reached that time of year when many people set resolutions, while those of us who follow the markets make predictions. Like resolutions, most predictions don’t stand up well. 😊 A year ago, in my Going Forward: The First Quarter 2024 and Beyond section, I made three bold (but, let’s be honest, fairly safe) predictions: that the US would strengthen domestic supply chains, that the market rally would broaden beyond the Magnificent 7, and that interest rates in both Canada and the US would drop. Well, I’d say that’s three-for-three—though I won’t be taking a victory lap since plenty of people saw these trends coming. 😊
Now, let’s take a shot at forecasting what’s ahead in 2025. The outlook for both Canadian and American markets is cautiously optimistic, but much will depend on the policies of the incoming US administration. Markets initially welcomed Donald Trump’s victory, buoyed by his pro-business stance and promises of tax cuts and deregulation. However, that optimism could be tested if he follows through on his tariff threats, which could drive up costs for consumers in both countries and create headwinds for both Canadian and US businesses. Markets don’t like uncertainty, and a second Trump presidency could bring plenty of it—potentially leading to heightened volatility and even a short-term pullback before stocks resume their historical upward trend.
As for the Magnificent 7, they’ll likely remain dominant, but investors may start looking beyond the big names for fresh growth opportunities. The AI boom isn’t slowing down either—Nvidia, Microsoft, Google, and others will keep pouring resources into AI, but there’s always the chance of an unexpected disruptor shaking things up.
On the economic front, inflation should continue trending downward in both Canada and the US, giving the BoC and the Fed more room to ease monetary policy. Interest rate cuts are expected in both countries, though Canada’s weaker economy may push the BoC to move more aggressively than the Fed. If that happens, the Canadian dollar could weaken against the US dollar.
Overall, markets should continue their upward trend, but the ride could be bumpier due to uncertainties around economic policies, tariffs, and interest rate timing. With a new and unpredictable US administration, markets are likely to see more volatility—but with that comes opportunity. To borrow from Warren Buffett, often considered one of the greatest investors of all time: “Be greedy when others are fearful.” If we can seize opportunities during uncertain times, we’ll be in a great position to keep growing our wealth through investing. 😊
