A brilliant start, a saggy middle, and then a flat thud – that was the trajectory for the S&P 500 last year.
The broad-based index blazed through the gates right from the start of 2024. In the first quarter of the year, it jumped up 10.2%. That’s more than 10 times its average gain since 2000.
But, that momentum couldn’t be sustained. The S&P added 3.9% and 5.5% in the second and third quarter, respectively, of 2024. In any other year, investors might not have been disappointed with those figures, but the index’s first-quarter performance set the bar so high that subsequent quarters seemed to pale in comparison.
In the final quarter of 2024, ending on Tuesday, the S&P gained just 1.9%. Making things worse, the so-called Santa Claus rally didn’t pan out as it has in years prior.
That said, a relatively weak ending to the year wasn’t enough to derail the ascent of the S&P 500 in 2024. The index surged 23.21% – notching a total of 57 record closes along the way. That’s just 0.99% short of last year’s gain of 24.2%.
In spite of all the new records, 2024 only places fifth in the top five best years for most all-time highs. There were 62 new all-time highs in 2017, 65 in 1964, 70 in 2021, and a whopping 77 in 1995.
Artificial intelligence stocks were behind much of 2024’s gains. Shares of Nvidia shot up 171%, while Broadcom, which one portfolio manager called “the next Nvidia in terms of outperformance potential,” jumped 108%.
But uncertainties await the markets this year. Investors will have to contend with the incoming Trump administration’s policies, possibly higher-than-expected interest rates for the year, which in turn are keeping Treasury yields elevated, among other headwinds.
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