2024 Market Snapshot: Key Highlights and Takeaways
- Written by: Michael Agorastos, CFP®
- November 14, 2024
US Markets
The U.S. stock market in 2024 has been marked by fluctuations amid ongoing adjustments to monetary policy and economic indicators. The year began with solid gains across major indices, supported by optimism around Federal Reserve rate cuts. In the first quarter, stocks rallied as investors anticipated an easing of the Fed’s aggressive interest rate hikes from 2022 and 2023.
Mid-year, however, brought mixed performance. A slowing labor market, evidenced by a few weaker-than-expected jobs reports, raised concerns about a potential recession, prompting increased caution among investors. This led to an 8.5% drop in the S&P 500 during July and early August before recovering when the Federal Reserve delivered an unexpectedly large 50-basis-point rate cut, signaling a potential pivot to a more supportive monetary stance. This fueled a resurgence in stock prices, allowing the S&P 500 to reach new highs by late August.
The technology sector, buoyed by excitement around artificial intelligence (AI) and other innovations, initially drove much of the market’s growth in the first half of the year, especially in the NASDAQ. As the 3rd quarter began, investors shifted from large-cap tech stocks to value-oriented sectors like consumer staples and healthcare, as these sectors historically perform well in the early phases of an economic recovery or when rate cuts are expected to boost spending and consumer resilience​.
The 4th quarter started slightly down in the lead up to the election, as investors derisked in anticipation of a close drawn-out election process. Following Donald Trump’s victory on election night, the U.S. stock market experienced a significant rally the following day, with major indices rising as investors responded to the potential deregulation and likelihood of corporate tax rates being reduced. After the election, the Federal Reserve continued its path to normalize interest rates with a ¼ point cut as the market had expected.
International Markets
International markets, on the other hand, were mixed for most of 2024. European and Japanese markets outperformed the U.S. at certain points in 2024, aided by economic recovery and attractive stock valuations. However, currency devaluation against a strong dollar has dampened some of these gains when measured in U.S. dollars. Emerging markets, especially in Asia, saw different trajectories for two of the world’s largest countries. India was able to maintain the high valuations and optimism, while China experienced slower growth amid domestic challenges and regulatory policies. Meanwhile, geopolitical tensions, including the Ukraine-Russia conflict and the crisis in the Middle East, added layers of uncertainty, especially impacting global energy markets and commodity prices.
Risks & Future Outlook
Looking ahead, the U.S. stock market faces several risks and uncertainties. High valuations in some sectors, particularly technology, have raised concerns among investors. The price-to-earnings (P/E) ratios for many of these stocks are well above historical averages, suggesting that any disappointing earnings or economic data could prompt a correction. Additionally, while inflation has moderated, the potential for a resurgence remains if labor market conditions tighten or if geopolitical events disrupt global supply chains. A key consideration is how the Federal Reserve will respond in 2025—if inflation begins to rise, the Fed might be forced to reconsider its easing stance, which could lead to increased volatility.
In summary, the U.S. stock market’s performance in 2024 reflects a blend of early-year optimism, mid-year caution, and ongoing adjustments to economic and monetary policy shifts. With high valuations and potential external shocks, we are emphasizing the importance of diversified portfolios as we prepare for the possibilities of a less predictable 2025.
As you navigate these evolving market conditions, having a dedicated financial strategy becomes even more essential. At Insight Wealth Strategies, we specialize in guiding clients through market shifts with tailored investment and financial planning solutions. Reach out to our experienced team to learn how we can help you stay positioned for success, no matter what 2025 may bring.
Written by,
Michael Agorastos, CFP®
Michael is a comprehensive, fee-only financial planner who began his financial services career with Insight Wealth Strategies in 2013. His primary areas of expertise cover retirement planning (e.g. cash flow analysis, developing retirement income strategies, stock option planning, corporate benefit analysis, etc.), investment planning, and high-level income tax reduction strategies for individuals and small business owners.
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Insight Wealth Strategies, LLC (IWS) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
