NEW YORK — Investors are buzzing as 2024 shapes up to be a promising year for markets, with soaring stock indices and rising alternative investments like Bitcoin and gold. After a year of significant growth, U.S. stocks, especially the S&P 500, are on track to close the year with notable gains not seen since the late 1990s. The S&P 500 is riding high with a climb of 24.3% year-to-date, echoing last year’s performance of 24.2%, which suggests another strong return for investors.
On December 20, numerous metrics showcased the success of the U.S. stock market. The Federal Reserve cut interest rates from previous highs, allowing stocks to thrive amid expectations for more cuts planned for 2025. The central bank's strategy has catalyzed optimism among investors, spiraling upward growth for equities driven by strong corporate earnings. Philip Petursson, chief investment strategist at IG Wealth Management, commented on the favorable environment for investors, stating, "If we are in an environment where US inflation and interest rates are going to be a little bit higher, Canada looks quite attractive.”
Adding to this environment are new platforms redefining ways investors can place bets, especially with prediction markets gathering momentum. This innovation was spotlighted by Crypto.com’s introduction of derivatives-style trading for sporting events, particularly their Super Bowl odds. This feature simplifies the betting process, offering straightforward exit strategies for users. According to Crypto.com, "Sports Event Trading is a CFTC-regulated derivatives trading feature available in the Crypto.com App."
Prediction markets are not just limited to sports bets. Following the 2020 U.S. Presidential election, platforms like Polymarket processed billions of dollars, showcasing their potential to engage users. Crypto.com has exceeded $1 billion on Super Bowl predictions alone. This surge reflects both innovation and increased interest among bettors who can leverage market conditions more effectively.
Meanwhile, Canadian stocks also show encouraging signs of continued growth. The S&P/TSX Composite Index closed the year with around 18% gains, indicating promising potential for 2025. Economists predict the index could reach 28,000 points next year, supported by five successive rate cuts by the Bank of Canada. BMO Capital Markets strategist Brian Belski outlined this outlook, forecasting expansions due to the positive effects of interest rate reductions and recovery flows back to Canadian equities.
Nonetheless, challenges loom as Donald Trump’s incoming administration has threatened tariffs, creating uncertainty about future growth. "A knock ’em down, drag them out, all-out trade war is kind of mutually assured destruction both for Canada and the US," warned Brian Madden, chief investment officer at First Avenue Investment Counsel.
The dynamic surrounding Trump’s policies does not end with tariffs. House Speaker Mike Johnson is currently facing his own political battles as he seeks to retain his position under anxious circumstances. With betting odds for Johnson’s reelection hovering just shy of 75% on Polymarket, political analysts stress the divisions within the Republican Party, which could impact his ability to unify his party. Craig Agranoff remarked, "Johnson's bid for House Speaker shows the deep divisions within the Republican Party."
Lawmakers are scheduled to vote on January 3 to elect the new House Speaker as Congress gears up. Johnson’s leadership will be closely examined, especially as the political climate becomes increasingly contentious with Trump endorsing him. His success will hinge on whether he can bridge the gap between moderates and hardliners.
Looking at the bigger picture, 2024 promises exploration within both traditional investments and innovative trading platforms like prediction markets. U.S. stocks could soar higher as interest rates continue to decline, potentially fostering new opportunities for growth. Major players, including Canadian investment strategists and policymakers, will be at the center of this investment narrative, as both domestic and global landscapes continue to shift.
With predictions asserting a bullish outlook for stock exchanges and new features breathing life back to investment platforms, both investors and the politically engaged will be watching closely as the new year begins. Staying informed about these investment trends will be key for successfully negotiating this vibrant yet uncertain marketplace.
