FundsLink News on December 3rd (Editor: Liu Rui) The surge of the US stock market this year can be said to be surging, constantly reaching new highs, shocking most people on Wall Street.

Although there is still about a month left until the end of the year, the usa stock market is expected to achieve its best performance in many years this year: since the beginning of the year, $S&P 500 Index (.SPX.US)$ it has increased by about 27%, higher than the 24% increase that the index recorded last year. If the index can maintain its current gains in the coming month, this will be the index's strongest performance since 2019.

Looking back to the beginning of this year, few on Wall Street could anticipate the strong performance of the US stock market this year: at the beginning of the year, the most bullish strategist on Wall Street for the US stocks was Ed Yardeni of Yardeni Research, who predicted a 17% rise in the S&P 500 index with a target price of 5400 points. However, most Wall Street strategists forecasted only an 8% increase in the S&P 500 index to around 5000 points.

However, the actual performance of the US stock market far exceeded Wall Street's expectations: the S&P 500 index set at least 50 new closing highs throughout the year, forcing Wall Street strategists to constantly catch up, frequently raising their full-year stock market target prices. As of this Monday, the S&P 500 index once again hit a new high, reaching a record high of 6047 points.

What factors are the US stocks relying on to achieve such a strong gain?

The US economy is running well.

At the beginning of this year, people were concerned that the US might face an economic recession in 2024, but these concerns turned out to be somewhat unnecessary.

From the data perspective, the overall performance of the USA economy has been good, with GDP growth close to 3%, and the labor market seems to be in good shape: employment numbers have reached a historic high, almost no layoffs, and retail sales data continues to be strong. Most importantly, the inflation rate in the USA has been steadily declining this year, gradually approaching the Federal Reserve's long-term target of around 2%.

In a stable economic environment, US corporate profits are steadily growing, measured by earnings per share of the S&P 500 index, US corporate profits are expected to set a new record this year.

Interest rates are falling.

With the basic control of the high inflation rate in 2022 and a return to normal levels, the Federal Reserve has started its first rate cut cycle since the outbreak of the COVID-19 pandemic in March 2020.

Since the beginning of this year, the Federal Reserve has already cut rates by 75 basis points, and it is widely expected that the Fed will cut rates by another 25 basis points at the policy meeting later this month.

Clearly, the decrease in interest rates stimulates the economy, usually also boosting stock prices. At the same time, the rate cut can help companies increase profits and enhance valuation.

Rapid announcement of the results of the presidential election

Last month's US presidential election showed a 'landslide' situation, also eliminating a major uncertainty for US stocks.

On the eve of the election, most market experts expect it to be a close and protracted competition, with the final election results possibly not announced until several weeks after the election.

However, to the surprise of many, the actual vote count results presented a 'one-sided' situation: most of the major swing states in the United States were won by the Republican Trump. Just on the morning after the vote, Trump had already clearly won this election.

Such a decisive election result has eliminated market uncertainty, helping the usa stock market achieve its best monthly gain of the year in November.$Dow Jones Industrial Average (.DJI.US)$The dow jones industrial average and the s&p 500 index rose by 7.5% and 5.7%, respectively.

After the election results were announced, many investors were hopeful about the bullish promises for Trump's second term (including tax cuts and deregulation). At the same time, despite many economists warning that Trump's tariff plan would harm the US economy, many market participants doubted that Trump's tariff threats were just posturing.

The AI ​​boom is still in full swing.

The artificial intelligence boom that started in 2023 has continued into 2024, with almost no sign of slowing down.

Since the beginning of the year, the performance of the "ai darling" has continued to surprise people, not only maintaining its extremely high valuation but also keeping the heat of the ai trend alive, pushing other ai-related companies to set historical highs.$NVIDIA (NVDA.US)$This year, nvidia,

$Dell Technologies (DELL.US)$And.$Broadcom (AVGO.US)$The stock prices rose by 181%, 63%, and 48% respectively, and these companies are all considered major beneficiaries of ai.

Wall Street analysts expect that with the delivery of Nvidia's next-generation Blackwell GPU chip, this AI feast will continue until 2025.

Will it continue to rise in 2025?

Unlike the beginning of this year, as we stand at the end of 2024, Wall Street strategists are generally optimistic about the trend of US stocks next year.

Some senior strategists at investment banks, including Deutsche Bank, have already forecast that US stocks will rise another 20% in 2025, pushing the S&P 500 index above 7000 points. Meanwhile, JPMorgan, which has been bearish on the stock market since the end of 2022, has suddenly turned bullish, expecting US stocks to rise by 8% next year with a target price of 6500 points.

After the stunning performance that wowed Wall Street this year, will US stocks continue to soar next year, living up to the high expectations of Wall Street institutional strategists? We wait and see.

Editor / jayden