The S&P 500 experienced another year of strong performance in 2024, marking the second consecutive year with returns of 20 percent or more. This achievement has contributed to a total gain of 70.1 percent since the bull market commenced in October 2022, including dividends.
Throughout 2024, the S&P 500 Index saw significant fluctuations. It began the year at 4,769 and rose to 5,243 by early April. After a pullback, it rallied again to reach 5,667 by mid-July due to favorable economic data and enthusiasm for artificial intelligence (AI). Another decline followed in early August but was reversed as AI stocks rebounded. The index reached approximately 6,050 by early December before pulling back slightly towards the end of the year following hawkish comments from the Federal Reserve and renewed inflation concerns. Overall, the S&P 500 gained 23.3% in price terms for the full year.
Economic growth played a pivotal role in these gains. Wall Street economists initially predicted an annual GDP growth rate of just 1.2 percent for 2024, but this forecast increased to an above-average rate of 2.7 percent by December as economic momentum built throughout the year.
Most major U.S. indexes posted above-average returns in 2024, with notable contributions from stocks linked to AI advancements. NVIDIA stood out with a surge of 171 percent for the year, accounting for a significant portion of the S&P's gains.
Fed rate cuts and declining inflation also bolstered equity markets in late 2024. The Fed reduced its benchmark rate by one percentage point between September and December while inflation fell from an initial rate of 3.4 percent down to 2.7 percent by November.
Despite these positive trends, some uncertainties remain as investors watch rising Treasury yields closely following hawkish comments from the Federal Reserve in December.
Enthusiasm surrounding AI continued throughout last year with substantial capital expenditures on technology expected to boost future revenue growth further into next year's forecasts according RBC Capital Markets' projections suggest moderate gains around mid-single digits range likely within broader balanced portfolios amid premium valuations along frothy sentiment readings urging caution yet maintaining investment positions moving forward cautiously watching developments unfold globally over time carefully managing risks associated potential shifts policy environment under new administration upcoming term ahead affecting various sectors differently depending circumstances involved ultimately impacting overall outcomes eventually influencing decisions made investors seeking maximize returns minimize losses optimize opportunities available present context changing landscape dynamic nature financial markets constantly evolving nature today tomorrow beyond foreseeable future ahead 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