A Record Year for the S&P 500
The S&P 500 has made headlines once again, finishing 2024 with an impressive return of 23%. This remarkable performance is particularly noteworthy as it marks the first time in over two decades, specifically since 1998, that the index has achieved back-to-back years with over 20% gains. This follows a strong performance in 2023, where the S&P 500 rose by 24.2%.
Historically, this two-year stretch of growth in the stock market is significant. Investors are left wondering: can this bullish trend continue into 2025?
Exceptional Performers in 2024
Concluding the year at an impressive 5,881.63, the S&P 500 reflects a 23.3% increase from its previous close of 4,770 at the close of 2023. It also represents a staggering 53.2% rise from the end of 2022, when it stood at 3,839.
During this time, the S&P 500 surged to an all-time closing high of 6,090 on December 6, spurred by a strong jobs report that ignited hopes for potential interest rate cuts by the Federal Reserve. However, momentum waned slightly as the index experienced a 2.5% decrease in December.
Leading the way among top S&P 500 performers in 2024 were Palantir Technologies (NASDAQ: PLTR), with a staggering return of 340%; Vistra Energy (NYSE: VST), which enjoyed a 258% increase; and NVIDIA (NASDAQ: NVDA), a key player in the AI chip market, boasting a remarkable 171% return. NVIDIA continues to shine as a standout asset, having returned an astonishing 819% over the past two years from its adjusted stock price of $14.61 at the end of 2022 to $134.29 at the end of 2024.
Nasdaq's Stellar Performance
Not to be outdone, the Nasdaq Composite also delivered an extraordinary performance, soaring by 29.8% in 2024 to close the year at 19,311. This gain follows a commendable rise of 42.1% in 2023. With a robust two-year return of 84.5% from its end of 2022 value of 10,466, the Nasdaq stands tall as one of the top-performing indices.
Among the Nasdaq's top performers in 2024 were AppLovin (NASDAQ: APP), which skyrocketed by 712%, as well as MicroStrategy (NASDAQ: MSTR), which appreciated by 358%, alongside Palantir. Meanwhile, the Dow Jones Industrial Average saw a respectable return of 13.3% in 2024.
Mid-Cap and Small-Cap Performance
In 2024, the S&P MidCap 400 returned 12.2%, outpacing the small-cap Russell 2000, which gained 10%. The Russell 2000 faced challenges in December, shedding 8.4% after a strong November where it surged by 10.8%. Meanwhile, the S&P 400 ended the year at 3,121, reflecting a 12.2% yearly increase but a December drop of 7.3% following the positive November performance.
The Future Outlook: Can the Bulls Continue?
As we look towards 2025, uncertainty looms for markets coming off a challenging December. Current valuations for both the Nasdaq and S&P 500 are among the highest since 2021, sparking concerns of potential corrections for overpriced stocks.
Compounding this uncertainty is the shift in administration that may bring changes beneficial to specific sectors. However, inflationary pressures and the Federal Reserve's cautious approach to rate cuts in 2025 and beyond leave investors on alert.
Market experts seem to reflect this caution in their projections. Most anticipate the S&P 500 to finish 2025 around 6,500, suggesting a solid 10% growth, although estimates range from a low of 6,400 to a high of 7,000. Notably, many had expected a more conservative outlook for 2024, which ultimately exceeded expectations.
Frequently Asked Questions
What did the S&P 500 return in 2024?
The S&P 500 finished 2024 with a remarkable return of 23.3%.
When did the S&P 500 last have consecutive years of over 20% gains?
This is the first time since 1998 that the S&P 500 has accomplished this feat.
Who were the top performers on the S&P 500 in 2024?
Top performers included Palantir, Vistra, and NVIDIA.
What significant milestones did the Nasdaq achieve in 2024?
The Nasdaq surged by 29.8%, reaching an impressive closing high of 19,311.
What is the projection for the S&P 500 in 2025?
Experts project the S&P 500 to finish around 6,500, reflecting a potential 10% gain.
