MARKETS:
- Renewed inflation jitters and the Federal Reserve (Fed) signaling fewer rate cuts led to market declines in December. The global equity index (MSCI ACWI IMI) decreased -2.37% in December and was up +17.49% for 2024. The S&P 500, which tracks large cap U.S. stocks, decreased -2.38% in December and was up +25.02% for 2024. The Russell 2000 Index, which tracks domestic small cap stocks, decreased -8.26% in December and was up +11.54% for 2024. The international developed equity index (MSCI EAFE) decreased -2.27% in December and was up +3.82% for 2024. The emerging markets index (MSCI EM) decreased -0.14% in December and was up +7.50% for 2024.
- In December, bond yields increased across maturities; the 30-year U.S. Treasury bond yield increased +42 bps to 4.78%, the 10-year yield increased +40 bps to 4.58%, and the 2-year yield increased +12 bps to 4.25%.
- The Barclays U.S. Aggregate Index, which is a measure of U.S. bond prices, decreased -1.64% in December and was up +1.25% YTD.
ECONOMIC AND GEOPOLITICAL HEADLINES
- U.S. gross domestic product (GDP) in the third quarter of 2024 increased +3.1%, according to the “3rd” estimate released by the Bureau of Economic Analysis. In the second quarter of 2024, GDP increased +3.0%.
- The December Services PMI (formerly Non-Manufacturing Purchasing Managers Index) increased to 54.10% from 52.10% in November. This represents expansion and is above market expectations of 53.50%. The December Manufacturing PMI increased to 49.30% from 48.40% in November. Per the Institute for Supply Management (ISM), a reading above 50 is considered economic expansion and below 50 is considered economic contraction.
- December non-farm employment increased by 256,000 jobs, and the unemployment rate declined to 4.1%, as reported by the Bureau of Labor Statistics on January 10, 2025. In December, employment increased in health care, government, social assistance and retail. Average Hourly Earnings (wages) increased +3.9% year-over-year in December.
PERFORMANCE UPDATES
- The Total Equity Fund decreased -3.01% in December and was up +14.45% for 2024. The International Equity Fund decreased -2.14% in December and was up +3.33% for 2024. The Small Cap Equity Fund decreased -7.96% in December and was up +10.44% for 2024. The Fixed Income Fund decreased -1.54% in December and was up +1.70% for 2024.
- Equity managers’ performance was mixed during the month, with PGIM Quant U.S., BFF, Xponance, BlackRock, Channing and LSV outperforming, while all other managers either in-line or behind their respective benchmarks.
- The UCF Balanced Fund, UCF’s most popular fund, was slightly behind its benchmark, returning -2.45% in December, and was up +9.26% for 2024. The Alternatives Balanced Fund decreased -1.39% in December and was up +10.75% for 2024. Finally, the Beyond Fossil Fuels Balanced Fund outperformed its benchmark, returning -1.86% in December, and was up +12.77% for 2024.