UBS_Equities-US_Equity_Strategy_U.S._Return_Decomposition_-_January_2025...-112585890_25页_1mb

US Equity Strategy Strategy Commentary (January 2025)

Key Observations on 2024:

• The S&P 500 achieved a strong return of 25.0%, driven significantly by Growth stocks over Value, with Technology sector stocks (especially large-cap "Big 6 TECH+") being major contributors.
• Within the S&P 500:
  • Large-Cap Growth led Small-Cap Growth in performance.
  • Large-Cap Value showed balanced performance from fundamental and multiple expansion drivers, while Small-Cap stocks were driven primarily by multiple expansion, with fundamental contributions being minimal.
• Key Sectors & Performers:
  • Strongest Performers (Overall): Technology (e.g., Large 6 stocks, Comm. Services, discretionary), followed by Energy (despite negative EPS momentum), benefiting from superior fundamentals and/or multiple expansion.
  • Weakest Performers (Overall): Energy (multiple compression after negative earnings impact likely), Health Care, and Materials (both fundamentals and valuation contraction).
  • Specific stocks like Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), Amazon (AMZN), Nvidia (NVDA) were likely top contributors.
  • Detractors included companies like Verizon (VZ), Discover (DFS), Mastercard (MA).
• Other Indices:
  • Russell 1000 (Large-Cap): Similar performance drivers, mix of fundamentals and multiple expansion.
  • Russell 2000 (Small-Cap): Heavily multiple-driven, fundamentals weak. Energy was a top performer.
  • MSCI EAFE (Emerging/MDE): Completed the year with a modest performance (+4.3% after currency adjustments), impacted by currency headwinds.

Risks & Valuation: Market returns depend on corporate earnings, interest rates, risk premia, and business cycles.

Disclaimer & Additional Information:
See the document for details on disclosures, conflicts of interest, research limitations, analyst certifications, rating definitions, and regional distribution specifics.

This summary captures the high-level sentiment and key drivers discussed in the report.