The S&P 500 gained more than 23% in 2024 after rising 24% in 2023. This marks the best performance for the index since 1997 and 1998.
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Despite a disappointing December, where the Dow dropped about 5% and the S&P 500 slid 2.5%, it was still a stellar year for stocks.
Inflation cooled, and consumer spending remained strong. Meanwhile, the job market proved solid but slowing. Investors were bullish on strong earnings growth for tech companies. The Dow rose 12.9% this year, and the tech-heavy Nasdaq gained 28.6%.
Last story of 2024 is a quick stocks wrap-up. Happy New Year's Eve!!!!https://t.co/FLn8HdgiDi
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The S&P 500 is up around 53% over the past two years, outperforming stocks in Europe and Asia.
Many of the stock market's best years over the past three decades started with low expectations.
Earnings expectations grew 9% last year, and analysts now expect the biggest increase in S&P 500 profits this year since 2018.
Expectations matter.
A low bar is easier to hurdle. pic.twitter.com/HGSmwqE7v5
— Callie Cox (@callieabost) January 2, 2025
Terry Sandven, chief equity strategist at US Bank Wealth Management, said, “Inflation is waning, interest-rate cuts are in motion, and earnings are trending higher, bolstering sentiment and providing valuation support.”
However, some analysts caution that stocks are currently overvalued. Uncertainty over the speed of future rate cuts from the Federal Reserve could spark a selloff.
Jeffrey Buchbinder, chief equity strategist at LPL Financial, said, “We believe the chances of another positive year in 2025 are favorable given the high probability of economic growth and a Fed that is likely to cut rates next year. But if resurgent inflation takes rate cuts off the table or speculation gets out of hand, this bull market could have difficulty making it through next year.”
The Fed signaled fewer rate cuts in 2025 than expected, which could sap the market’s momentum.
S&P’s best annual run since ’98
The “Magnificent Seven” of tech stocks—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—accounted for over 50% of the S&P 500’s total returns this year. Nvidia stock was a top performer, surging 179%. The Nasdaq Composite surged 28.6% in 2024, driven by confidence in tech and AI.
Palantir, the AI-focused data company, joined the Nasdaq in December, capping off a year in which its stock rose almost 340%. US Treasuries saw the 10-year US Treasury note edge yield to 4.57% on Tuesday. The US dollar index is up over 7.1% across the year.
Bitcoin surged about 120% across 2024, marking a dramatic turnaround from just two years ago. It continued to gain mainstream acceptance, bolstered by Trump’s embrace of cryptocurrencies. Gold also had a strong year, rising by 27% and outpacing the S&P 500.
The increase in the reserves of central banks worldwide drove gold’s rally.
Cocoa futures on the New York exchange surged more than 168% annually due to climate issues disrupting Ghana’s and the Ivory Coast’s harvests.
