How the Stock Market Defied Expectations in 2024

2024 has proven to be an exceptional year for investors, with U.S. stocks rallying significantly. This surge has propelled the S&P 500 to new records, driven by continuous economic growth and the Federal Reserve's decision to lower interest rates.

The year has seen traditional favorites like Big Tech companies grow even larger, alongside a notable rise in alternative investments like Bitcoin and gold.

Record Growth

As of December 20, the S&P 500 has enjoyed a remarkable increase of 24.3% during the year, building on last year’s impressive gain of 24.2%. This marks the first time since 1998 that the index has closed out two consecutive years with a rise of at least 20%.

All-Time Highs

This year, the S&P 500 has hit a total of 57 all-time highs, starting early in January. The first record followed a two-year rally from declines caused by high inflation. Every month except April and August has seen new records set, with the latest one on December 6.

Federal Reserve Cuts Rates

The Federal Reserve has reduced its main interest rate three times this year from a two-decade peak, contributing to the market's success. While investors had hoped for more significant cuts—forecasting a total of 1.5 percentage points for 2024—the Fed's announcement in December indicated that further cuts may be limited in the upcoming year.

Market Reactions to Elections

The Dow Jones Industrial Average experienced a substantial gain of 1,508 points the day after Election Day, fueled by speculation on what Donald Trump's potential return to the White House might mean for the economy. The S&P 500 also enjoyed its best day in almost two years, rising by 2.5%.

Bitcoin Soars

Bitcoin prices reached a new threshold, surpassing $100,000 for the first time, following a remarkable climb spurred by the lower interest rates and positive sentiment after the election. Just two years prior, Bitcoin was valued under $17,000.

Gold's Strong Performance

Gold has seen an increase of 26.7% this year, driven by global tensions and demand for safe-haven assets. With interest rates decreasing, gold became more appealing, as lower bond yields make it a more attractive investment despite not providing any interest.

Tesla's Surge

Tesla’s stock price passed $420 in December, reaching a record high. The company began the year below $250, buoyed by expectations that changes in the political landscape could benefit it.

Nvidia's Revenue Boom

Nvidia reported revenues hitting $91.2 billion through the nine months ending in October, fueled by the ongoing boom in artificial intelligence technologies, marking a steep rise from the previous year.

Meme Stocks in the Spotlight

Notably among meme stocks, GameStop saw a 74% increase in value after a prominent supporter appeared online, reigniting interest in the stock.

U.S. Economic Growth

Throughout the first three quarters of 2024, the economy grew by annualized rates of 1.6%, 3.0%, and 3.1%. These numbers have surpassed many expectations, especially considering inflation concerns from 2022.

Office Vacancy Rates

This year, the office vacancy rate in the U.S. reached 20.1%, a record high attributed to changing work patterns influenced by the pandemic.

Home Sales Challenges

Through the first 11 months of 2024, 3.73 million previously occupied homes were sold, which is reflective of a continuing slump in the housing market due to high mortgage rates and a limited supply of homes.

stocks, bitcoin, gold, growth, economy