The Dow Plunged over 1100 Points After the FOMC Meeting.

Source: MSN.com. The DJIA is still trading near an all-time high (as of 12.19.2024). (c) Microsoft. Used with permission.

The Dow Plunged over 1100 Points After the FOMC Meeting.
What does that signal for 2025? Why are we starting to hear about an “overdue market correction?” Will it actually happen?
 
Wall Street wasn’t happy after the FOMC Meeting on Dec. 18, 2024. Thursday, Dec. 19, broke the 9-day Dow Jones Industrial Average losing streak by the slimmest of margins (+0.04%). The DJIA is down 6% from the high of 45,074, set on Dec. 4, 2024. What caused stocks to drop? What should we do, if anything, to protect our wealth from another drop? Is this a temporary setback, or is an overdue market correction waiting in the wings of 2025?
 
Here are the factors we’ll cover in this blog.
 
Why the Negative Market Reaction to the Dec. 18, 2024, FOMC Meeting?
Don’t Panic! Prepare. 
Rebalancing is Key
How Will Tariffs Affect the Economy
 
And here is more information on each point.
 
Why the Negative Market Reaction to the Dec. 18, 2024, FOMC Meeting?
On Dec. 18, 2024, we learned that inflation is moving “sideways” instead of down. As a result of the economy remaining strong and inflation staying sticky, the expectation for further rate cuts in 2025 was trimmed from a full percentage point in 2025 to half that. That offers little help for anyone hopeful to purchase a home at a lower interest rate, for corporations, car purchasers, credit card payments, or for those struggling half-empty office buildings and malls.
 
There’s a lot of debt that needs to be paid off or refinanced, so stubbornly high(ish) interest rates are negative for growth, for consumer spending (almost 70% of the GDP tally) and for the economy. It’s not just the $36.2 trillion public debt that we all hear about that is the problem. Consumer and corporate debt and loans are also alarmingly high. The total of U.S. debt and loans is at $99 trillion. Email [email protected] if you’d like an updated Debt and Asset Bubble Chart.
 
This isn’t a dire warning, however. The economy is expected to slow down to 2.1% in 2025 from 2.5% this year. That is still growth (not a recession).
 
Is it enough growth to support the already lofty stock prices? After 2 years where the S&P500 simply soared (+26.3% in 2023 and +23.7% in 2024 so far), can stocks continue at this pace? The 10-year average return for large caps was just 12%. So, the S&P500 has far outperformed of late. Incidentally, the DJIA returns for 2023 and 2024 were just and 13.7% and 12.2%, respectively (half that of the larger index). Which index you own matters!
 
So what should you do?
 
Don’t Panic! Prepare. 
When the DJIA is underperforming the S&P500, there’s an easy way to lean into performance.
 
When stocks drop, we have a plan for that – before it happens.
It’s why we:
·      Adopt a diversified, age-appropriate plan,
·      Rebalance 1-3 times a year,
·      Overweight an additional amount safe,
·      Dollar cost average into any new fund that is at or near an all-time high.
 
This time-proven plan earned gains in the Great Recession and the Dot Com Recession and outperformed the bull markets in between. It’s as easy as a pie chart. The plan protects us from market drops, while allowing us to benefit from stocks soaring. Just like a well-built house, once we set our financial home up properly, we move in and spring clean once a year. It’s not a day trading strategy. It’s the life math we all should have received in high school and college.
 
Rebalancing is Key
Late December and early January are great times to do an annual review of our wealth plan to make sure that it is age appropriate and properly protected and diversified. Yesterday’s sell-off is just a reminder of how important it is to adopt a time-proven 21st Century plan instead of gambling that good times will continue forever. You can read about this easy strategy in the 6th edition of The ABCs of Money. You can learn and implement it at our January 10-12 Financial Freedom Retreat. Or you can get an unbiased 2nd opinion in our private coaching program. Email [email protected] to learn more and register now.
 
How Will Tariffs Affect the Economy
According to the CBO, the proposed tariffs would have “upward pressure” on inflation. (Some FOMC participants factored this into their economic projections.) The tariffs could also decrease GDP by 0.6%. Inflation could prompt the Feds to increase interest rates, while a weak or stalled economy would prompt them to cut. Clearly these two scenarios put the FOMC in a bit of a pickle. We’ll have to see which seems the most pressing in real time as the 2025 government fiscal policies are put into play. 
 
Bottom Line
The Summary of Economic Projections are not set in stone, as we saw by how much they changed yesterday, compared to the Sept. 2024 projections. There are a lot of moving parts that will affect things either positively or negatively – including, potentially, continued strength in the Magnificent 7 and AI, and the potential negative effects of tariffs, elevated equity prices, a weak real estate market, half-empty office buildings and malls, and astronomical debt. There are high expectations for the breakthrough technology, artificial intelligence, and Magnificent 7 companies. However, the good news is already priced in.
 
Investors are not fans of uncertainty, particularly when prices are so high, which is why the markets reacted so swiftly and severely. Wall Street experienced extraordinary gains in 2023 and 2024 (if you purchased the right index). However, we have seen some heartbreaking reversals of fortune multiple times in the 21st Century. Stocks sank in the pandemic, losing over 35% in just one month. That is why it’s important to fix the roof while the sun is still shining. With Wall Street still very high, now is a perfect time to capture gains and keep that money, instead of just waiting and seeing whether an overdue market correction of -10% or more happens.  
 
 
Join us at our online New Year, New Me Financial Freedom Retreat Jan. 10-12, 2025 (online) and our Rebalancing Masterclass (Capture Gains & Protect Principal) on Jan. 18, 2025.

Learn how to:

* Invest in hot industries, such as Nvidia and artificial intelligence,
* Hedge against a weaker dollar,
* Invest and compound your gains,
* Green your retirement plan,
* Easy and efficacious nest egg strategies,
* Get hot and diversified (including in artificial intelligence and EVs),
* Evaluate stocks,
* Keep an age-appropriate amount safe, and,
* Know what's safe in a Debt World.

You'll even discover how to save thousands annually with smarter big-ticket choices. Yes, it's a complete money makeover. 
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Email [email protected] or call 310-430-2397 to learn more and register. Learn the 15+ things you'll master and read testimonials in the flyer on the home page at NataliePace.com. Register with friends and family to receive the best price. ​

"Ten minutes into the first day I was already much smarter about investing than I ever thought I would be in my life and I knew I was in exactly the right place at this retreat. I am amazed at how EASY and FUN it is to make my money work for me and those I love. I think this kind of information should be compulsory in schools. I wish I'd learned this sooner." CM

If you’d like an unbiased 2nd opinion on your current wealth plan, email [email protected] for pricing and information.
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Join us for our Online New Year, New You Financial Freedom Retreat Jan. 10-12, 2025. Email [email protected] or call 310-430-2397 to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details.

Join us for our Restormel Royal Immersive Adventure Retreat. March 7-14, 2025. Email [email protected] to learn more. Click for testimonials, pricing, hours & details. Register now. There is only 1 room available. This retreat includes an all-access pass to all of our online training for a full year for two, and three 50-minute private, prosperity coaching sessions. Much more affordable than you might think. Email [email protected] to learn more.

Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​​

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.