The average year for the S&P 500 since 1950 has gained 9.5% and was higher 72% of the time.
After a 20% year? It jumped to 10.6% and higher 81.0% of the time.
After back-to-back 20% years? 20% on average and never lower.
— Ryan Detrick, CMT (@RyanDetrick) January 5, 2025
The stock market wrapped up a blockbuster year in 2024, with the S&P 500 gaining more than 23% after rising 24% in 2023. This marks the best performance for the benchmark index since 1997 and 1998, and only the fourth time in history that it has seen back-to-back gains of over 20%. Retirement plans, such as 401(k)s and pension funds, often invest in indices like the S&P 500.
As a result, account balances benefit significantly when stocks have a standout year.
Stocks To Watch | 📊Ready, set, trade! Keep an eye on these stocks as they set the market abuzz #StockMarket pic.twitter.com/BgTydIF2z6
— ET NOW (@ETNOWlive) January 3, 2025
Despite a disappointing December that saw the Dow drop about 5% and the S&P 500 slide 2.5%, Wall Street saw impressive returns as inflation cooled and consumer spending remained strong. The job market also proved solid but slowing.
Investors were bullish on strong earnings growth for tech companies, driving stocks higher, particularly in November. The Dow rose 12.9% this year, while the Nasdaq gained 28.6%. The S&P 500 is up by around 53% over the past two years, outperforming stocks in Europe and Asia.
The cruelty of the market gods in numbers.
Last year:
73% of stocks lagged the S&P 500 (worst year for underperformance since at least 2000)
The S&P 500 and its stocks moved in different directions in nearly 1/4 days
Yet you couldn't afford to sit back and gripe about it. pic.twitter.com/YNtuHTykYv
— Callie Cox (@callieabost) January 3, 2025
Stocks highlight strong two-year gains
Terry Sandven, chief equity strategist at US Bank Wealth Management, noted, “Inflation is waning, interest-rate cuts are in motion, and earnings are trending higher, all of which bolster sentiment and provide valuation support.”
However, some analysts warn that stocks might be overvalued and uncertainty remains over future rate cuts from the Federal Reserve and other economic factors. Jeffrey Buchbinder, chief equity strategist at LPL Financial, commented, “We believe the chances of another positive year in 2025 are favorable given the high probability of economic growth and a Fed that is likely to cut rates next year.
But if resurgent inflation takes rate cuts off the table or speculation gets out of hand, this bull market could have a difficult time making it through next year.”
Tech companies had a standout year, with the “Magnificent Seven” of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla accounting for over 50% of the S&P 500’s total returns. Nvidia stock was a top performer, surging 179%. US Treasuries saw mixed movements, with the yield on the 10-year US Treasury note rising by over 15% in 2024, signaling expectations of future economic growth and inflation.
Bitcoin surged by about 120% across 2024, continuing to gain mainstream acceptance and bolstered by Trump’s embrace of cryptocurrencies. Gold also had a strong year, rising by 27% and outpacing the S&P 500, as investors often see it as a safe haven against economic turmoil and inflation. Cocoa futures on the New York exchange surged more than 168% across the year due to climate issues affecting harvests in Ghana and the Ivory Coast, which account for over 70% of global cocoa production.
As we look ahead to 2025, analysts and big banks expect continued growth amid strong economic data, though some caution against the potential for setbacks.
