But in a way, those fears came at a good time, Bespoke Investment co-founder Paul Hickey said, because it helped push the Fed to ease monetary policy. “It almost panicked the Fed into cutting 50 basis points at its annual meeting” in September, Hickey said.
Markets rallied further late in 2024, fuelled by what analysts say was exuberance over the election of Donald Trump to a second presidential term. The president-elect punctuated the “Trump trade” when he rang the bell at the New York Stock Exchange in December, though stocks fell days later on signals that the Fed, rather than cutting interest rates further, planned to leave them at their current level for longer than many observers had expected.
Here are the highlights of a momentous year in stocks.
The ‘Magnificent Seven’ soar
The S&P 500′s record gains in the first half of 2024 were driven by seven tech stocks that significantly outperformed the other companies on the index. The “Magnificent Seven” - Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla - have an outsize effect on the S&P 500 because the index is weighted by market capitalisation, a shorthand for companies’ size and value.
The rest of the index started to catch up in the latter half of the year, a rally that showed “it’s not just seven companies driving the entire economy,” Hickey said.
But the technology and AI sectors continued to dominate investors’ attention. And no stock captured their enthusiasm like AI chipmaker Nvidia, whose earnings calls have inspired rapturous takes from traders and casual investors alike.
“Every bull market has a theme, and the theme of this bull market has been AI,” Hickey said.
Chris Rupkey, with Fwdbonds, said Nvidia’s juggernaut status has made it something of a bellwether for the broader market.
“Follow the bouncing ball of Nvidia,” he said in August. “Nvidia down, sell everything. Nvidia up, buy it all.”
Nvidia’s growth has slowed in recent months and its stock has taken temporary hits after strong earnings reports, as analysts set exceedingly hard-to-meet expectations and some raise concerns that rampant spending on AI is creating a financial bubble.
But some analysts say Nvidia will have staying power and catalyse further investment in AI.
“This is the fourth industrial revolution playing out across tech,” said Dan Ives, global head of technology research at Wedbush Securities. “It’s led by Mag 7, but now software and cybersecurity players are getting in.”
Interest rate relief
US stocks dipped, then surged, after the Fed cut interest rates by a half-percentage point in September, easing monetary policy for the first time since March 2020 amid signs that inflation was moderating.
That, in turn, boosted consumer sentiment and took the edge off interest rates.
“A funny thing kind of happened on the way to the recession and or economic slowdown that we all anticipated, which is basically that the [middle- and high-income] consumer just never flinched,” Samana said.
The Trump effect
US stocks jumped on the news that Trump would return to the White House after campaigning on promises to slash regulations. Companies expected to benefit under the Trump administration - such as private prison company Geo Group and Tesla, which is led by Trump adviser Elon Musk - leaped while renewable energy and pharmaceutical stocks sank in the immediate aftermath.
But Hickey said the conventional wisdom about winners and losers in the market doesn’t always pan out when it comes to politics.
“Coming into the first Trump administration, you would have thought the energy sector would have done well,” he said. “It was the worst performing sector.”
Looking ahead, Hickey expects the industrial sector will perform well in 2025, especially if loosened regulations help lingering construction projects break ground - such as renewable energy proposals green-lit by the Inflation Reduction Act of 2022.
“Whether it was Trump or Biden that was elected president, the overall trend in the economy is to bring more production back to the United States,” Hickey said.
The biggest wild card going into 2025 is tariffs, said David Sekera, chief US market strategist at Morningstar. Trump has said he intends to impose a blanket tariffs on imports, but it’s unclear what countries or sectors would be covered and how much of the promise is campaign rhetoric.
Bitcoin booms
Bitcoin had a massive year - and that was especially reflected in the share price of MicroStrategy, a business software company that has snapped up several billions of dollars in bitcoin. The company’s stock is up more than 340% year to date, with much of those gains coming after the presidential election.
Bitcoin itself began the year with a massive boost, as the Securities and Exchange Commission approved exchange-traded funds tied to the price of bitcoin. In the following months, bitcoin’s price nearly doubled, from around US$40,000 per coin in January to about US$73,000 per coin in March.
The price largely held steady until Trump was elected to a second term. After the November election, bitcoin’s price soared and at one point surpassed US$100,000 per coin, a milestone cheered by the cryptocurrency community. The first and most valuable cryptocurrency is up more than 120%. .
Noteworthy stocks
While Magnificent Seven stocks received big publicity this year, a few lesser-known companies dwarfed their gains - at least when it came to growth.
Sezzle, a “buy now, pay later” company, is up more than 1000% on the year, with much of its gains coming after the November election, though some of those gains were wiped out in December when an activist short-selling firm released a report accusing the company of risky lending practices.
Shares in NuScale Power, a nuclear power company focused on small modular reactors, is up more than 450% on the year. The rise reflects investor excitement over the transition to low-carbon energy sources, particularly new technologies such as NuScale’s designs.
AppLovin, a mobile app development and marketing company, also had a banner year on Wall Street, with the companies’ shares up more than 700% on the year. Analysts say the company has been able to wield AI to more effectively market apps.
