Stocks surged in 2024 even as Americans fretted over the economy
Trader Edward Curran works on the floor of the New York Stock Exchange, Wednesday, Dec. 18, 2024. (AP Photo/Richard Drew) · Washington Post · ASSOCIATED PRESS

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If you invested in the stock market this year, chances are you came out pretty well.

The S&P 500 and Nasdaq composite index rose to record highs, as investor enthusiasm for artificial intelligence fueled a massive bull run, and investors cheered the Federal Reserve’s shift to lower interest rates. Participants in 401(k) and 403(b) plans also benefited big, with Fidelity Investments reporting that account balances reached their highest averages on record.

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The stock market soared despite Americans’ widespread discontent with the economy, highlighting a disconnect between the experiences of many U.S. households and the performance of their investments. U.S. markets outperformed those in Europe and Asia: The S&P 500 gained 23 percent this year, while the Shanghai Composite Index rose 13 percent, and the STOXX Europe 600 moved up 6 percent, as of Tuesday afternoon.

The strong performance also came amid expectations of economic slowdown in 2024.

“There were real concerns over the summer about whether we were once again heading for a hard landing and/or a recession,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

But in a way, those fears came at a good time, Bespoke Investment co-founder Paul Hickey said, because it helped push the Fed to ease monetary policy. “It almost panicked the Fed into cutting 50 basis points at its annual meeting” in September, Hickey said.

Markets rallied further late this year, fueled by what analysts say was exuberance over the election of Donald Trump to a second presidential term. The president-elect punctuated the “Trump trade” when he rang the bell at the New York Stock Exchange in December, though stocks fell days later on signals that the Fed, rather than cutting interest rates further, planned to leave them at their current level for longer than many observers had expected.

Here are the highlights of a momentous year in stocks.

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The ‘Magnificent Seven’ soar

The S&P 500’s record gains in the first half of 2024 were driven by seven tech stocks that significantly outperformed the other companies on the index. The “Magnificent Seven” - Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla - have an outsize effect on the S&P 500 because the index is weighted by market capitalization, a shorthand for companies’ size and value.

The rest of the index started to catch up in the latter half of the year, a rally that showed “it’s not just seven companies driving the entire economy,” Hickey said.