NEW YORK (AP) — The year 2024 has proven to be incredibly fruitful for investors, as U.S. stocks surged higher, defying many forecasts. The S&P 500 has climbed substantially, setting numerous records along the way, as the economy demonstrated resilience amid shifting financial landscapes.
Heading toward the close of the year, the S&P 500 has registered impressive gains of 24.3%, following last year's similar rise of 24.2%. This marks the first time since 1998, during which the market has enjoyed two consecutive years of over 20% growth, according to data available as of December 20.
Throughout 2024, the index enjoyed remarkable momentum, setting 57 all-time highs. The climbing began early — on January 19, as the index completed its recovery from the downturn experienced due to inflationary pressures and the Federal Reserve's aggressive interest rate hikes. Investors welcomed news of rate cuts, with the latest record occurring on December 6.
The Federal Reserve made three significant cuts to its main interest rate this year, reducing it from the two-decade high of 5.25%. This shift eased concerns surrounding potential economic slowdowns. Initially, many traders had anticipated cuts exceeding 1.5 percentage points for 2024, but the Fed’s predictions for two more cuts in 2025 sparked renewed optimism, albeit with some disappointment.
Investors reacted positively to the political environment as well. After Election Day, the Dow Jones Industrial Average rose by 1,508 points as hopes surged surrounding Donald Trump's potential economic policies. The S&P 500 enjoyed its best day in two years, climbing 2.5% the following day. Despite fears about potential inflation spikes, the broader market responded swiftly to Trump's election, indicating investor confidence.
Among the notable stock performances this year was Bitcoin, which rose dramatically, crossing the $100,000 mark for the first time this year, with records hitting above $108,000. Interest rate cuts and Trump's positively viewed stance on cryptocurrency spurred much of this growth, especially following his election victory.
Gold also enjoyed significant support with prices skyrocketing 26.7% this year, driven by both global uncertainties and the Federal Reserve's monetarily loosening policies. The conditions allowed gold to thrive as one of the safest assets amid geopolitical tensions.
The technology sector led the charge, with companies like Nvidia recording staggering revenue growth. Nvidia's revenue soared to $91.2 billion through October 27, showcasing the immense financial windfall generated by the AI boom. The company's market cap surged past $3 trillion.
Tesla's stock also set new benchmarks, passing the $420 mark, reflecting investor enthusiasm driven partially by expectations of favorable policies following Trump's return. Trading much higher than its price of under $250 at the beginning of the year, Tesla remains at the forefront of growth for electric vehicles.
On the retail front, GameStop saw significant gains as well, particularly observed after the return of its popular figure, Keith Gill, known as “Roaring Kitty.” Shares jumped by 74% on May 13 after he made headlines supporting the company online.
While the overall economic indicators bode well, challenges remain. The vacancy rate for U.S. office buildings reached 20.1%, highlighting the struggle for commercial real estate as the pandemic shifted workplace dynamics and remote work practices took hold.
Housing continues to present challenges, with total home sales hit by rising mortgage rates and limited inventory. A total of 3.73 million previously occupied homes were sold through November. Even as the market remains resilient, it would require staggering December sales to surpass last year's figures.
Despite the hurdles, the outlook remains positive. The economy has performed remarkably well over the year, managing growth rates of 1.6%, 3.0%, and 3.1% for the first three quarters, significantly outpacing many initial pessimistic forecasts during challenging inflationary periods.
Overall, 2024 has been defined by remarkable recoveries across various sectors of the market, all culminating toward what appears to be another record-setting year. Investors once again embrace optimism, drawing on both historical performance and the prevailing economic environment as they gear up for whatever challenges may lie ahead.
