If you’re an investor, you had to enjoy 2024 immensely.
Especially if you bought or held one of three sorts of assets.
- Large capitalization stocks, preferably tech stocks.
- Mutual funds or exchange-traded funds tied to assets like the Standard & Poor’s 500 Index or the Nasdaq Composite Index.
- Gold, silver or bitcoin.
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If you were a bond investor, it was a different story. Prices were rising until the Federal Reserve started to cut interest rates. Then, suddenly, long-term rates went UP. And stayed up.
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if you were the owner of, say, a restaurant or, perhaps, a small store or chain of stores, the year was tricky at best and awful at worst. Business bankruptcy filings have been rising steadily in the United States since 2022.
So, let’s take a tour of 2024, which has seen the S&P 500 rise more than 20% for two straight years and make a small posit about 2025.
The economy looks solid overall, but issues lurk
One can’t complain much about the economy, even if recession fears abounded when the year began.
The U.S. unemployment rate is a touch above 4%, hardly worrisome. Incomes appear to be rising in most of the United States. Retailers have been signaling the holiday shopping season was strong.
But inflation continues to vex, despite the Fed’s continuing efforts to push domestic inflation down to 2% a year.
No one is sure how President-elect Trump’s policies, including potential tariffs and mass deportation of undocumented workers, will affect the economy.
And all in the background lurks geopolitics: Tensions in the Middle East, tensions in east Asia, the Ukraine-Russia War.
Stocks: Big continues to be better
If you were MicroStrategy (MSTR) , Palantir Technology (PLTR) , Meta Platforms (META) or Nvidia (NVDA) , 2024 has been a spectacular year.
As of Friday, shares of the four are up 422%, 361%, 70% and 177% for the year, respectively.
Apple (AAPL) has been no slouch either. True, it’s only up only 32.8%. But its market capitalization is at $3.86 trillion, far and away the most valuable company in the world. And all the business media are watching for that market cap to top $4 trillion.
Don’t forget AppLovin (APP) , which builds games and mobile software to let companies connect more easily to customers. The shares are up 741% for the year.
The small-cap Russell 2000 stocks have not been huge participants, however. The index is up just 10.7%, even as supporters insist this group of stocks will see a resurgence in 2025 when — and if — investors start to explore smaller companies.
Some stocks were just plain creamed. Think Super Micro Computer (SMCI) , prized for its server computers that handle artificial intelligence data wonderfully. Not prized for its financials. The shares are off nearly 90% after RISING 255% in the first quarter.
Or Intel (INTC) and Walgreens Boots Alliance (WBA) , down 59% and 63%, respectively. Both were removed from the Dow Jones Industrial Average. Walgreen was moved out of the S&P 500 as well and is Now trying to go private.
The S&P 500 and Nasdaq Composite are up more than 20% for a second straight year. History suggests the gains should continue in 2025. Some on Wall Street see the S&P 500 rising perhaps to 7,000.
They may be right. While there is distress in retailing, restaurants and perhaps home building, there are few signals of serious issues that might threaten markets.
A reminder. In 2007, few market strategists — if any — saw the disaster that was coming in 2008. After a soft market in the first half of the year, they saw a recovery. In fact, the S&P 500 fell 38.5% in 2008.
Where the averages stand
- S&P 500: Up 25.2% year-to-date.
- Dow industrials: Up 14.1%.
- Nasdaq Composite: Up 33.5%.
- Nasdaq-100 Index: Up 27.6%.
- Russell 2000: Up 10.7%.
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The bond market continues to rule all
This is a hard truth: The price of money matters. Just ask Federal Reserve Chairman Jerome Powell. Yes, between September and December, the Fed cut its key interest rate from 5.25% to 5.5% down to 4.25% to 4.5%.
And yet, bond investors seemed skeptical: About whether U.S. inflation really can fall to 2%. About the incoming Trump administration’s spending and tax plans.
And they seemed to worry about chronic deficits. U.S. government debt is equal to about 121% of gross domestic product. The U.S. is not alone. It’s 251% of Japanese GDP.
The 10-year Treasury yield fell to as low as 3.62% in September, just as the Fed was about to announce its first rate cut. The yield has since jumped to 4.63%.
Rising bond yields have slammed stock prices and gutted a rally in bonds.
Gold peaked at $2,801.80 an ounce on Oct. 30 before falling back to $2,636.50, still up 27% for the year. Silver hit $35.07 an ounce on Oct. 22, up 45.6%. Then, it fell back to $29.98.
More Economic Analysis:
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There’s pain in mortgage rates and housing for now
Between the end of 2009 and March 2022 was a golden age for housing. The rate on a 30-year mortgage was under 5% and dropped to as low as 2.78% in the summer of 2021.
The Fed’s campaign to bring inflation down, however, pushed the 30-year rate to about 8% by October 2023. When rate fell to about 6% in September, anyone involved in housing was thrilled.
But now rates are pushing back toward 7%. Home sales have stalled. Publicly-traded homebuilders have seen shares tumble. The iShares Dow Jones U.S. Home Construction ETF (ITB) is down 8.7% just in December.
Wells Fargo sees lower rates and a better housing market in the second half of 2025.
Oil and gasoline prices cheer drivers by falling
For drivers of gasoline-powered vehicles, 2024 has been a decent year. After reaching $87.67 in April, crude has slid 19.5% to $70.60 a barrel and down 1.5% on the year.
The national average price of gasoline was at $3.025 a gallon on Sunday, according AAA. It peaked at $3.679 on April 19. A year earlier, the peak came on Sept. 18 — at $3.881.
The current national price is $2 a gallon less than its 2022 peak.
Oil producers and investors are not happy. Energy is the S&P 500’s second-weakest sector this year. ExxonMobil (XOM) shares are up 6% this year but down 9.7% in December.
Occidental Petroleum (OXY) is down 30% since May. Warren Buffett’s Berkshire Hathaway (BRK.A) and (BRK.B) , owns 28% of the company. But Berkshire’s bet may not be very profitable, Barrons says. Most of the shares were bought at $54 or higher, the magazine estimated. The stock ended Friday at $48.66.
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Bitcoin’s ride has been wild again
The good news for bitcoin fans is the crypto currency is up 123% this year and up 41% since Donald Trump, a crypto enthusiast, won the presidential election on Nov. 5.
The bad news — if bitcoin holders care — is its volatility. After a record close of $106,735 on Dec. 17, up 58.6% since the election, it closed Saturday at $94,907 — a 12.4% decline in just 12 days.
Still, you can invest in bitcoin via any of a host of exchange-traded funds. They’re all up more than 115% since trading began and 60% in the fourth quarter.
There’s talk of more exchange-traded funds being approved.
Next year’s meme stocks
Lately, there’s been talk about quantum computing, a new concept that would revolutionize computing.
The technology uses the principals of quantum mechanics, which works with subatomic particles, rather than bytes, to do the work. Results so far suggest the technology is fantastically fast.
Several companies working on quantum computing have come public, but they produce almost no revenue nor profits.
In the last week, though, several of these stocks moved higher after NASA announced it has hired Quantum Computing (QUBT) to develop new imaging tools.
The stock finished the week at $18.35, up 4.1%. It’s up 160% in December and 1,912% in 2024.
D-Wave Quantum (QBTS) was up 54% to $9.91 for the week and has risen 1,026% for the year. Rigetti Computing (RGTI) , up 82% on the week, is up 460% in December and 1,625% in 2024.
Expect a lot of noise on these stocks in 2025.
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