Stock Market Closes Out Stellar Year with Gains
As the curtain falls on 2024, the U.S. stock market is poised to end the year on a high note, with major indexes posting significant gains despite a brief post-Christmas slump.
S&P 500 Leads the Charge
The S&P 500, which set a remarkable 57 record highs this year, is up over 24% for the year, marking its first back-to-back annual gains of more than 20% since 1998. The benchmark index is coming off two consecutive declines of more than 1%, but has bounced back with a 0.2% increase in early trading Tuesday.
Dow Jones and Nasdaq Follow Suit
The Dow Jones Industrial Average is up 120 points, or 0.3%, as of 9:56 a.m. Eastern time, while the Nasdaq composite has risen 0.1%. More than 85% of the stocks in the S&P 500 are trading higher, with health care and financial stocks driving the gains. AbbVie and JPMorgan Chase are among the top performers, rising 0.7% and 0.5%, respectively.
Bond Yields Slip, Crude Oil Prices Rise
Bond yields have mostly fallen, with the yield on the 10-year Treasury slipping to 4.52% from 4.54% late Monday. The yield on the two-year Treasury has also decreased, falling to 4.22% from 4.24%. Meanwhile, crude oil prices have risen 0.5%.
Global Markets React
Indexes in Europe are mostly up, while Asian markets are mixed, with exchanges in Tokyo and Seoul closed for New Year holidays.
What’s Behind the Rally?
The stellar performance of the U.S. stock market this year can be attributed to a growing economy, solid consumer spending, and a strong jobs market. The artificial-intelligence sector, led by companies like Nvidia and Super Micro Computer, has seen skyrocketing prices, contributing to the market’s upward trajectory. Solid corporate earnings growth has also played a significant role.
Economic Outlook
Wall Street expects companies in the S&P 500 to report broad earnings growth of more than 9% for the year, according to FactSet. The economy has avoided a recession, and receding inflation has raised hopes that the Federal Reserve will deliver multiple interest rate cuts in 2025, which would ease borrowing costs and fuel more economic growth.
Caution Ahead
However, the Fed has signaled a more cautious approach heading into 2025, citing concerns about sticky inflation. President-elect Donald Trump’s threats to hike tariffs on imported goods have raised anxiety that inflation could be reignited, casting a shadow over the market’s outlook.
Other Markets Shine
This year’s market rally has extended beyond stocks, with Bitcoin climbing above $100,000 for the first time and gold shattering records on its way to a more than 26% gain for the year.
What’s Next?
Markets will be closed on Wednesday for the New Year’s Day holiday. On Thursday, investors will get an updated snapshot of U.S. construction spending for November, followed by an update on manufacturing for December on Friday.
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