The U.S. stock market has defied expectations once again in 2024, with the S&P 500 surging nearly 25% and setting nine all-time highs throughout the year. This marks the second consecutive year of significant growth for the index, a feat not seen since the late 1990s. Big Tech companies like Apple and Nvidia continued to be winners, with Nvidia’s revenue skyrocketing from $39 billion to over $91 billion in just nine months, fueled by the AI frenzy.
The cryptocurrency market also saw record highs, with Bitcoin reaching $108,000 following the U.S. presidential election. The Federal Reserve cut interest rates once this year, providing some relief to the economy. However, the central bank’s announcement of only two more possible rate cuts in 2025 fell short of earlier projections.
The U.S. economy showed steady growth, with annualized seasonally adjusted growth rates of 1.6%, 3.0%, and 3.1% for the first three quarters, surpassing expectations set during a time of high inflation.
U.S. market thrives in 2024
The remote work trend continued to impact the office real estate market, with the vacancy rate for U.S. office buildings reaching an all-time high of 18.1% through the first three quarters.
Despite the housing market’s slowdown due to high mortgage rates and a shortage of homes for sale, the U.S. economy demonstrated resilience throughout the year. As 2024 comes to a close, investors reflect on a profitable year marked by market concentration and high valuations. The “mega cap eight” companies, including Alphabet, Amazon, Apple, Meta, and Microsoft, traded at an average forward P/E of 31, highlighting the risk-on environment.
Analysts advise investors to consider opportunities beyond U.S. borders, as U.S. companies now account for roughly 70% of the global market cap, far outpacing America’s share of the global economy and population. Foreign investments in U.S. debt nearly doubled the flows into the entire Eurozone, emphasizing the attractiveness of the U.S. as an investment destination. Looking ahead to 2025, investors are advised to remain cautious, diversify their portfolios, and consider the growing opportunities in international markets.
The exceptional performance of the past two years sets high expectations, and the market’s ability to maintain its upward trajectory remains to be seen.
