The US stock market has defied predictions and delivered yet another remarkable year in 2024, with the S&P 500 hitting fresh records, as the economy continued to grow and the Federal Reserve initiated interest rate cuts. With big gains in major sectors, the year proved to be a lucrative one for investors, especially in tech, cryptocurrency, and other traditional safe-haven investments.
As of December 20, the S&P 500 had surged 24.3%, continuing its upward trajectory after last year’s growth of 24.2%. This marks a rare occurrence, as the last time the US stock market closed out a second consecutive year with such a leap was in 1998, the year of Bill Clinton’s impeachment and Mark McGwire’s record-setting home run. This year’s 57 all-time highs, set by the index, are testament to the continued strength of the market, even as challenges such as inflation and higher interest rates had initially raised concerns.
The Federal Reserve played a crucial role in fostering market optimism, cutting interest rates three times during the year from a two-decade high. These reductions, while falling short of initial expectations, provided much-needed relief to the economy. However, December’s announcement of fewer cuts expected in 2025 led to a slight disappointment for some investors. The hope for additional cuts in the new year continues to fuel market optimism.
The economy as a whole also delivered solid results. The US economy grew at an annualized rate of 1.6%, 3.0%, and 3.1% in the first three quarters of the year, surpassing many pessimistic forecasts that had predicted a recession in the wake of inflation. The ongoing strength of the economy was notable, despite challenges faced by lower-income households due to high prices.
In terms of individual investments, Bitcoin made waves by topping $100,000 for the first time, reaching a record high of $108,000. The cryptocurrency benefitted from the Federal Reserve’s rate cuts, as well as a newfound embrace by former US President Donald Trump, who has become a vocal supporter of digital currencies. Meanwhile, gold also had a stellar year, rising 26.7% due to increased demand for safe-haven investments amid global instability.
Big Tech companies like Apple and Nvidia were standout performers, with Nvidia’s staggering revenue growth of 74% bolstered by the rise of artificial intelligence. The company’s chips remain crucial to the AI boom, pushing its market value to over $3 trillion. In the electric vehicle sector, Tesla saw its stock soar, rising past $420 per share in December. This milestone, familiar to many due to its association with Elon Musk and his “420” comments from 2018, marked another chapter in Tesla’s impressive market journey.
Despite strong performances in certain sectors, the housing market continued to struggle, with existing home sales down compared to 2023. The total number of homes sold in 2024 was on pace to fall short of 2023’s record low, driven by higher mortgage rates and a shortage of available properties.
As the year closes, the US stock market’s performance remains a striking contrast to the fears that gripped investors at the start of 2024. The impressive gains, particularly in tech, cryptocurrency, and gold, suggest that despite challenges, the US economy and its markets continue to demonstrate resilience and growth.
