The stock market is set to gain over 20 percent for the second year in a row – a remarkable feat it has not achieved since the late 1990s.
The S&P 500 is on course to rise over 20 percent this year, after gaining 24 percent in 2023.
According to data from FactSet, consecutive rallies above this benchmark would mark the index’s strongest performance since the dot-com bubble in 1997 and 1998.
The S&P 500 monitors the performance of the largest 500 companies in the US, including tech giants like Amazon and Apple, as well as major banks such as JPMorgan Chase and Bank of America.
The index has typically made an average annual return of 10 percent since its inception in 1957.
CNN reported that predecessors of the index have only achieved such high consecutive gains on three other occasions: in 1927 and 1928, 1935 and 1936, and in 1954 and 1955.
Despite fizzling out in the last few weeks of 2024, the stock market has had a blockbuster year, bolstered in November by the re-election of Donald Trump.
Rising stock market returns are good news for Americans invested in 401(K) and IRA retirement plans, which tend to be invested in the major market indices. That means when Wall Street makes gains, so too do their savings.
The S&P 500 is on course to rise over 20 percent this year, after gaining 24 percent in 2023
Wall Street saw impressive returns this year as inflation cooled and consumer spending remained strong, while the job market proved solid but slowing, CNN reported.
Investors were also bullish on strong earnings for tech stocks, including Nvidia, Apple, Amazon and Meta.
The blue-chip Dow index rallied over 12 percent this year, while the tech-heavy Nasdaq index gained over 31 percent.
The S&P 500 is up over 60 percent over the last two years, after a disastrous 2022 which saw it lose a huge 20 percent.
‘Inflation is waning, interest-rate cuts are in motion and earnings are trending higher, all which bolster sentiment and provide valuation support,’ Terry Sandven, chief equity strategist at US Bank Wealth Management, told the outlet.
Many investors believe this growth will continue into 2025, especially with the arrival of a business-friendly Trump administration with expectations of lower corporate taxes and looser regulations.
According to FactSet, analysts expect the S&P 500 to rise by just shy of 15 percent next year.
The stock market soared following the news that Trump had won a second term in office
Uncertainty over the speed of Federal Reserve rate cuts next year is a rising concern for some analysts
Ruchir Sharma, who is an author and fund manager, said attempts to rein in US debt will eventually weaken economic growth
However some economists think the market is overvalued, and see the dwindling returns at the end of this year as a warning sign.
Uncertainty over the speed of Federal Reserve rate cuts next year, and the possibility of benchmark borrowing costs remaining higher for longer, are rising concerns for some analysts.
‘Everybody’s expecting a good year next year, and that leaves a lot of room for disappointment,’ Callie Cox, chief market strategist at Ritholtz Wealth Management, told CNN.
Veteran fund manager Ruchir Sharma has also said that America’s ‘addiction to government debt’ could cause the stock market to crash next year.
The author and fund manager said attempts to rein in the debt – now at a record $36 trillion – will eventually weaken economic growth.
Sharma, who is chairman of Rockefeller International and worked at Morgan Stanley for 25 years, made the comments in a column for the Financial Times.
He had previously said that the US financial market has grown into ‘the mother of all bubbles’, which is due to pop soon.
