Janice R. Andrews
As 2024 draws to a close, stocks have ended the year near record highs, capping off a year of impressive growth. Over the past 12 months, the Nasdaq Composite (^IXIC) has surged by 30%, while the S&P 500 (^GSPC) has climbed over 24%. The Dow Jones Industrial Average (^DJI), though trailing its counterparts, posted a respectable 13% gain.
Despite market dips toward year-end, investors remain optimistic about the future, fueled by key events and trends. The Federal Reserve implemented its first interest rate cut in four years, and major political shifts, including a changing presidency, bolstered market sentiment.
The US economy has demonstrated resilience, even as growth wobbled briefly during the summer. Now, with eyes firmly on 2025, here are 10 charts that encapsulate the strength and evolution of markets and the economy in 2024.
1. A Bull Market Surges Forward
The S&P 500 set a remarkable 57 new records in 2024, placing it among the top five years for all-time highs.
Strong corporate earnings and robust performance from the “Magnificent Seven” tech stocks — Nvidia (NVDA), Tesla (TSLA), Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Microsoft (MSFT), and Meta (META) — powered this rally. Nvidia, in particular, led the charge with a stunning 175% gain.
As the rally broadened, earnings growth extended beyond these tech giants, and analysts predict S&P 500 earnings will grow 15% year-over-year in 2025.
2. A Historic Presidential Election
The 2024 presidential election brought unprecedented drama and market reactions. Former President Donald Trump defeated Vice President Kamala Harris after President Joe Biden withdrew from the race just months before Election Day.
Trump’s victory spurred market movement, particularly among small-cap stocks in the Russell 2000 (^RUT). Though small caps eventually surrendered much of their post-election gains, sectors like energy and financials saw short-lived rallies.
Bitcoin (BTC-USD) stood out, surging over 130% in 2024 and reaching new heights. Trump’s crypto-friendly stance, including pledges for supportive regulation, further boosted sentiment.
3. Broad-Based Earnings Recovery
Earnings growth in 2024 was no longer confined to the largest tech companies. By year-end, the other 493 companies in the S&P 500 had exited an earnings recession.
This broadening of growth bodes well for 2025, with experts pointing to expanding corporate profitability as a key driver for continued market strength.
4. A Resilient US Economy
Throughout 2024, the US economy showed remarkable resilience. Retail sales consistently exceeded expectations, GDP growth remained robust, and the unemployment rate held steady at around 4%.
Although inflation remains a challenge, moderating price increases have boosted confidence in a “soft landing” — where inflation stabilizes without triggering a recession.
5. Inflation’s Bumpy Road
While inflation has cooled compared to the heights of recent years, it hasn’t been a smooth path. The core Personal Consumption Expenditures (PCE) index and core Consumer Price Index (CPI) recorded higher-than-expected monthly increases in late 2024.
The Federal Reserve’s latest projections anticipate core inflation of 2.5% in 2025 before easing to 2.2% in 2026.
6. Labor Market Adjustments
The labor market remained a focal point in 2024. The unemployment rate briefly rose to 4.3% in July, sparking fears of a recession. However, the increase stabilized, and economists now describe the labor market as “low hire, low fire,” reflecting gradual cooling without widespread layoffs.
Hiring and quit rates also trended lower throughout the year, signaling a more balanced labor market.
7. Federal Reserve Policy Shifts
In a pivotal move, the Federal Reserve cut interest rates for the first time in four years, reducing the benchmark rate by 100 basis points over 2024.
While the Fed initially projected more aggressive cuts for 2025, it has since adopted a cautious stance. Current expectations suggest two rate reductions in 2025, bringing the rate to 3.9%.
8. Tech Dominance Continues
The tech sector remained a dominant force in 2024, with the “Magnificent Seven” driving a significant portion of the market’s gains. These companies collectively accounted for nearly 40% of the S&P 500’s market capitalization, the highest concentration in over 30 years.
This trend underscores the influence of tech giants on market dynamics, even as other sectors contributed to the year’s rally.
9. The Bitcoin Boom
Bitcoin’s resurgence was a standout story of 2024. The cryptocurrency hit all-time highs, surpassing $100,000, before consolidating later in the year.
Trump’s support for crypto-friendly policies has fueled optimism for 2025, with industry stakeholders anticipating regulatory clarity and further adoption.
10. Market Projections for 2025
Looking ahead, strategists remain optimistic about the market’s trajectory. The median S&P 500 target for year-end 2025 is 6,600, reflecting an 11% increase from current levels.
With corporate earnings expected to grow and the economy on solid footing, the groundwork is set for another strong year.
A Complicated but Promising Outlook
While 2024 was marked by historic events and challenges, the resilience of markets and the economy has been evident. The Federal Reserve’s cautious approach, coupled with strong corporate earnings and a balanced labor market, paints a hopeful picture for 2025.
As we reflect on 2024 through these 10 charts, the data tells a story of strength, adaptability, and optimism in the face of uncertainty. With investors and policymakers eyeing the road ahead, the coming year promises to be just as dynamic.
