Market Recap: S&P 500 Caps Off Impressive Two-Year Run as 2024 Comes to a Close
Major Indexes Close Lower on Final Trading Day of 2024
As the final trading bell of 2024 rang on Tuesday, December 31, U.S. stock markets closed lower, capping off an impressive two-year run for major indexes. Despite the day’s losses, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all posted substantial gains for the year, marking a period of remarkable growth in the face of economic uncertainties and geopolitical tensions.
S&P 500 Achieves Rare Back-to-Back 20%+ Gains
The S&P 500 (^GSPC) finished the year with a gain of approximately 23%, following a 24% increase in 2023. This marks the first time since 1997-1998 that the benchmark index has posted back-to-back annual gains exceeding 20%. The index closed at 5,881.63, down 0.43% for the day, but up an impressive 59% over the past two years.
Dow and Nasdaq Performance
The Dow Jones Industrial Average (^DJI) ended the year up about 12%, closing at 42,544.22, a slight decrease of 0.07% for the day. The tech-heavy Nasdaq Composite (^IXIC) outperformed its peers with a remarkable 31% gain for the year, despite falling 0.90% on the final trading day to close at 19,310.79.
“Magnificent Seven” Drive Market Gains
The stellar performance of the “Magnificent Seven” tech stocks – Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA) – played a crucial role in the market’s success. These companies accounted for over 50% of the S&P 500’s total returns in 2024, with Nvidia standing out as a top performer, surging over 180% for the year.
Economic Factors and Market Sentiment
Several factors contributed to the market’s strong performance in 2024:
1. Cooling inflation: Investors remained optimistic as inflation rates continued to moderate throughout the year.
2. Federal Reserve policy: The Fed began cutting interest rates in September after holding them at decade-highs since mid-2023, boosting market sentiment.
3. Strong consumer spending: Despite economic headwinds, consumer spending remained robust, supporting corporate earnings.
4. Solid job market: While showing signs of cooling, the job market remained resilient, providing stability to the economy.
5. AI boom: Investor enthusiasm for artificial intelligence technologies drove significant gains in the tech sector.
Looking Ahead: Market Events and Concerns for 2025
As investors look to 2025, several factors may influence market performance:
1. Interest rate outlook: The Federal Reserve has signaled fewer rate cuts than previously expected in 2025, which could impact market momentum.
2. Geopolitical tensions: Ongoing conflicts, including the Russia-Ukraine war and Middle East tensions, continue to pose risks to global markets.
3. Trump’s economic policies: With Donald Trump’s reelection, market participants are weighing the potential impact of his economic policies on growth and inflation.
4. Market breadth concerns: Despite overall index gains, market breadth has been poor, with most S&P 500 companies falling since November.
5. Earnings growth expectations: Investors will be closely watching corporate earnings reports for signs of continued growth.
Key Stocks to Watch
Several stocks made significant moves in the final trading days of 2024:
– Tesla (TSLA): Down 3.30% on the day, closing at $417.41
– Nvidia (NVDA): Slight gain of 0.35%, ending at $137.49
– MicroStrategy (MSTR): Fell 8.19% to $302.96, reflecting volatility in the cryptocurrency market
Conclusion
As 2024 comes to a close, the U.S. stock market has demonstrated remarkable resilience and growth. While challenges remain on the horizon, the strong performance of major indexes and key sectors like technology provide a solid foundation for investors entering 2025. However, market participants should remain vigilant, keeping an eye on economic indicators, geopolitical developments, and corporate performance in the coming year.
