Performance data from financial news outlets comparing the 'Magnificent Seven' stocks to the S&P 500

S&P 500 Closes 2024 With 24% Gain, Best Two-Year Run Since 1997-1998 Amid AI-Fueled Rally

Dec 31, 2024, 01:30 PM

The S&P 500 is set to close 2024 with a gain of approximately 24%, marking its second consecutive year of gains exceeding 20%. This performance represents the best two-year run for the index since 1997 and 1998, when it surged by about 66%. The rally in 2024 was driven by a robust U.S. economy, declining inflation, and a surge in interest in big tech stocks fueled by artificial intelligence, with the index notching 57 record closes. The Nasdaq Composite also performed strongly, gaining about 29% for the year, while the Dow Jones Industrial Average rose by around 13%. Despite a late-year stumble, the market's overall performance has been bolstered by optimism about economic growth, potential interest rate cuts by the Federal Reserve, strong consumer spending, a solid job market, and the re-election of Donald Trump, which investors anticipate will lead to favorable business policies. The so-called 'Magnificent Seven' tech stocks, including companies like Nvidia and Tesla, have been significant contributors to the S&P 500's gains, driven by robust tech earnings growth. However, concerns linger about overvaluation and the sustainability of the bull market into 2025, with some analysts predicting a more modest growth of about 14.8% for the S&P 500 next year.