How the Stock Market Surprised Investors in 2024

What a remarkable year 2024 has been for investors.

U.S. stocks surged this year, lifting the S&P 500 to record heights as the economy continued to expand and the Federal Reserve started to lower interest rates.

The year showcased some familiar winners, particularly in the tech sector, where giants like Apple and Nvidia saw their stock values increase significantly. However, it wasn't just Big Tech that thrived; alternative investments like Bitcoin and gold also enjoyed substantial growth.

Remarkable Stock Market Growth

As of December 20, the S&P 500 is on track to achieve a two-year streak of at least 20% growth, something that hasn't happened since 1998. The index has risen by 24.3% this year, following a 24.2% increase last year.

Record Highs in 2024

This year alone, the S&P 500 has set an impressive 57 all-time highs. The first record was established on January 19, marking the end of a two-year downturn amid high inflation and concerns about possible recession from rising interest rates. This upward momentum continued throughout the year, with records set nearly every month, excluding April and August, with the latest peak occurring on December 6.

Federal Reserve Actions

The Federal Reserve cut its main interest rate three times this year from a two-decade high, which offered some much-needed respite for the economy. These expectations for rate cuts, alongside optimism for further reductions in 2025, played a significant role in the stock market's success this year. However, the actual cuts came to only 1 percentage point, falling short of the 1.5 percentage points many predicted at the year's beginning.

Market Reactions to Political Changes

Following Election Day, the Dow Jones Industrial Average jumped by 1,508 points, as investors speculated on how Donald Trump's potential return to the White House might impact the economy. The S&P 500 also had its best day in nearly two years, increasing by 2.5%.

Record Bitcoin Prices

Bitcoin reached new heights, exceeding $100,000 this past month, climbing above $108,000. This surge was fueled by declining interest rates and a favorable political environment following Trump’s election. Two years ago, Bitcoin had plummeted to below $17,000 after the collapse of the crypto exchange FTX.

Gold's Strong Performance

Gold saw a significant rise of 26.7% this year, reaching record levels as global conflicts increased demand for safe-haven assets. The Fed's interest rate cuts contributed to this trend, making gold more appealing as lower bond yields make it less competitive.

Tesla Breaks the $420 Barrier

Tesla's stock surged past $420 in December, setting another record. The stock began the year below $250, largely due to the anticipated benefits of Elon Musk's favorable relationship with Trump.

Nvidia's Revenue Surge

Nvidia reported an impressive $91.2 billion in revenue for the nine months ending October 27, driven by the booming interest in artificial intelligence. This remarkable growth has raised Nvidia's market value to over $3 trillion.

The Meme Stock Resurgence

GameStop saw a significant 74% increase on May 13 when Keith Gill, also known as “Roaring Kitty,” made his first appearance online in three years and backed the stock. This revival momentum also boosted several other so-called meme stocks, such as AMC Entertainment.

Continued Economic Growth

This year, the U.S. economy grew at annualized rates of 1.6%, 3.0%, and 3.1% in the first three quarters, surpassing the expectations of many analysts who feared a recession due to efforts to control inflation.

Commercial Real Estate Challenges

The vacancy rate for U.S. office buildings hit 20.1% through the first three quarters of 2024, an all-time high, mainly due to the pandemic's impact on remote work leading to decreased demand for office spaces.

Slowdown in Housing Sales

A total of 3.73 million previously occupied homes were sold in the U.S. through the first 11 months of 2024. For 2024's sales to match the previous year, December sales would need to increase by 20%, highlighting the ongoing slump in the housing market due to rising mortgage rates.

stocks, growth, records, economy, Bitcoin