Image: Traders work on the floor of the New York Stock Exchange.
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The US stock market concluded 2024 with a slight dip in the final trading session. However, this minor weakness did little to diminish the remarkable gains achieved throughout the year. The S&P 500 boasted a surge of over 23%, marking the second consecutive year with gains exceeding 20%. Other markets also experienced record-breaking performances, solidifying 2024 as a truly exceptional year for investors.
A Year of Triumphs Driven by AI, Rate Cuts, and Political Change
The resounding success of the market in 2024 can be attributed to several key factors. The artificial intelligence (AI) boom propelled chipmakers and software companies to new heights, significantly contributing to the impressive gains of the Magnificent Seven tech giants. Notably, Nvidia’s market capitalization briefly surpassed $3 trillion, momentarily eclipsing Apple as the world’s most valuable company.
Beyond the tech sector, the rally broadened to encompass other industries. Utilities, essential for powering AI infrastructure, experienced substantial growth. The Federal Reserve’s decision to ease monetary policy in the latter half of the year, supported by progress on inflation and a robust labor market, further fueled risk appetite and dispelled lingering recessionary concerns.
Adding to the momentum, the re-election of Donald Trump in November ignited optimism for deregulation and tax cuts, propelling a steep market rally in the lead-up to the election.
Record-Breaking Performances Across Asset Classes
The remarkable performance in 2024 extended beyond equities. Bitcoin shattered previous records, surging past the $100,000 mark for the first time in history. Commodities, ranging from precious metals like gold to agricultural products like cocoa, also achieved unprecedented highs.
Image: Bitcoin’s price soared in 2024.
Navigating Uncertainty After a Prolonged Rally
Following two years of exceptional gains without a single correction, investors are now confronted with a degree of uncertainty. The final trading sessions of 2024 witnessed market fluctuations as traders grappled with questions surrounding future interest rate movements and the sustainability of the remarkable rally. While most analysts remain bullish, some suggest that investors should anticipate potential corrections and slower growth in the coming year.
Market Close and Upcoming Economic Data
US stock and bond markets were closed on Wednesday, January 1st, for New Year’s Day. Investors will be closely monitoring key economic data releases this week, including initial jobless claims on Thursday and ISM manufacturing data on Friday. These indicators will offer insights into the health of the economy and may influence market sentiment in the early days of 2025.
Market Performance on December 31, 2024:
- S&P 500: 5,881.79, down 0.43%
- Dow Jones Industrial Average: 42,544.72, down 0.07% (-29.01 points)
- Nasdaq Composite: 19,310.79, down 0.90%
Commodity, Bond, and Cryptocurrency Markets:
- West Texas Intermediate crude oil: $71.83 a barrel, up 1.2%
- Brent crude oil: $74.83 a barrel, up 1.14%
- Gold: $2,637.1 an ounce, up 0.73%
- 10-year Treasury yield: 4.573%, up two basis points
- Bitcoin: $93,416, down 0.8%
This remarkable year sets the stage for an interesting 2025, leaving investors and analysts alike eager to see how the market will perform in the face of new challenges and opportunities.
