February 2025 Charts

Three Charts That Have Our Attention

If you are curious about what’s going on in the market or economy, we’d like to share some charts / graphics that we think are insightful.

S&P 500 Valuations. The largest companies in the S&P 500 have significantly higher forward P/E ratios, with the top 10 trading at 30.7x earnings. Nearly 40% of the index weight is concentrated in those stocks, meaning these few companies have an outsized impact on index performance. Investors should be mindful of paying a premium for large growth stocks and the risks associated with increased market concentration.

Fed Rate Cycle Patterns. The average gap from the final U.S. rate cut to the first rate hike has ranged from 7 to 24 months. The timing of a future hike depends on economic trends, with some forecasting a potential rate increase by mid-2025.

12 Month Inflation Trends. Auto insurance (+11.8%) and airfare (+7.1%) saw the highest increases, putting pressure on consumers' transportation and travel budgets, while rent, prescription drugs, and restaurant meals also climbed, impacting essential living costs. Meanwhile, electronics (-4.0%) and appliances (-4.2%) experienced price declines, likely due to slowing demand or improved supply chains. With overall inflation at 3.0%, rising costs in necessities could strain household budgets, while declining prices in discretionary goods suggest shifting consumer spending habits. Investors and policymakers may need to focus on sectors like housing and healthcare, where persistent inflation could drive future economic challenges.

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