Wall Street Lost Ground as Investors Closed the Book on a Remarkable Year for Equities
The United States stock market closed out the year 2024 on a negative note, with the S&P 500, Nasdaq, and Dow Jones Industrial Average all declining on Tuesday. The closure of the year marked a remarkable year for equities, driven by the growth in artificial intelligence and interest rate cuts by the Federal Reserve.
The Nasdaq surged 28.6%, the S&P 500 notched a 23.3% gain, and the Dow posted a 12.9% advance, with the communication services, technology, and consumer discretionary sectors leading the way with gains of 29.1% to 38.9%. The healthcare, real estate, and energy sectors were the only ones to post single-digit gains, while the materials sector was the sole decliner, dropping nearly 1.8%.
Despite the decline on Tuesday, analysts are optimistic about the prospects for 2025, with many expecting continued strength driven by the growth in artificial intelligence and a robust U.S. economy. However, they also caution against stretched valuations and uncertainties surrounding tax and tariff policies from the incoming administration.
Greg Bassuk, CEO of AXS Investments, noted that the year 2024 was a “massive year for equity gains driven by a trifecta of the AI explosion, a slew of Fed interest rate cuts, and a robust U.S. economy.” He also believes that the AI boom still has room to grow and will continue to have a significant impact on the market in the coming year.
For the fourth quarter, the Nasdaq gained 6.2%, the S&P 500 advanced 2.1%, and the Dow eked out a 0.5% gain. The U.S. stock market is now pricing in about 50 basis points of additional interest rate cuts from the Federal Reserve in 2025, with investors weighing the impact of the incoming administration’s policies on certain sectors.