2024 is destined to be an extraordinary year in the history of the US stock market.

According to Zhito Finance APP, despite facing multiple challenges in global politics and economics this year, the three major U.S. stock indexes have continuously set new historical records. From the S&P 500 Index's nearly 60 times of closing at a new high this year, to the Nasdaq Index breaking the 20,000 point threshold for the first time, and the Dow Jones Industrial Average crossing the 45,000 point mark for the first time, the U.S. stock market has shown extraordinary vitality and resilience.

As of the time of writing, the S&P 500 Index has increased by 25% this year, likely achieving a growth rate of over 20% for two consecutive years—something that has only occurred four times in the past 100 years. The Nasdaq Composite Index, predominantly made up of technology stocks, has surged even faster, with an annual increase of over 31%. In contrast, the Dow Jones Index's growth has been relatively moderate, with an annual increase of 14%.

Among them, the S&P 500 Index and Nasdaq continue to benefit from the AI boom, with events such as the Federal Reserve's interest rate cuts and Trump's victory in the U.S. election further fueling the upward trend. Meanwhile, the Dow Jones Index, regarded as a barometer of the U.S. economy's health, is supported by the positive outlook for the economic recovery and strong corporate earnings.

Although the overall performance of U.S. stocks in 2024 is strong, there is a clear differentiation in performance among different sectors and individual stocks. Next, let us review the market dynamics of U.S. stocks this year.

2024 U.S. Stock Market Review: The Bull Market Unexpectedly Continues, Breaking Wall Street's Doubts.

At the end of 2023, many economists predicted that the U.S. economy would slow down in 2024, and the uncertainties regarding inflation and monetary policy made Wall Street cautious about the U.S. stock market. However, the performance of the U.S. stock market in 2024 so far has completely shattered these doubts.

In the first half of the year, the U.S. stock market performed excellently driven by AI Stocks, especially chip giant NVIDIA (NVDA.US), whose Market Cap briefly surpassed Microsoft (MSFT.US) and Apple (AAPL.US), becoming the world's most valuable company.

In August, the market experienced a sell-off due to concerns over U.S. economic growth and Federal Reserve policy. NVIDIA's revenue guidance did not meet Wall Street's most optimistic expectations, and the monetization of AI was questioned. Documents showed that "stock god" Warren Buffett reduced his Apple Shareholding by 50% in the second quarter, intensifying market risk-averse sentiment. However, this decline in the U.S. stock market lasted less than a month and did not break the "10% threshold" considered a technical adjustment.

Entering September, the Federal Reserve cut interest rates by 50 basis points, marking the first rate cut since 2020, and the U.S. stock market responded with a rise. In November, Trump won the U.S. election, sparking a new wave of market frenzy. In December, despite the Federal Reserve's hawkish turn on rate cuts, leading to fluctuations in the U.S. stock market, the overall upward trend remained solid.

Overall, the U.S. stock market in 2024 experienced fluctuations and adjustments influenced by multiple factors, but it maintained a strong upward trend, repeatedly hitting historical highs.

The U.S. stock market's rapid advance cannot be separated from the "boost" provided by technology stocks. In contrast, some Sectors performed poorly. Next, let's review the performance of major sectors in the U.S. stock market in 2024.

All 11 sectors experienced an increase.

From the performance of the 11 Index ETFs in the S&P 500, with the support of the AI boom and interest rate cuts by the Federal Reserve, tech stocks such as Meta (META.US) and Google (GOOGL.US) surged, driving the Communications Services Sector to continue last year's strong momentum. Additionally, led by Amazon (AMZN.US) and Tesla (TSLA.US), the Consumer Discretionary Sector also performed well. The 'Trump 2.0' sentiment ignited optimism, with the Financial Sector also shining brightly; in contrast, the Energy, Medical Care, and Materials Sectors fell to the bottom. However, all 11 sectors of the US stock market achieved gains in 2024.

Tech stocks remain the 'most eye-catching'.

Following 2023, tech giants continue to be the core driving force leading US stocks to soar in 2024. Apart from Microsoft, other tech giants—Apple, Google, Amazon, Meta, NVIDIA, and Tesla—performed excellently.

As the biggest winner of the AI boom, NVIDIA continues to lead the seven major tech giants this year. NVIDIA's stock price rose by 239% last year and surged by another 177% this year. This year, NVIDIA has twice claimed the title of the world's highest market-cap publicly traded company, although currently Apple has reclaimed the top spot with a market cap of nearly 4 trillion USD, NVIDIA at 3.4 trillion USD, and Microsoft at 3.3 trillion USD.

In the past six quarters, NVIDIA's revenue grew at least 94% year-on-year, with three times exceeding 200%. Although NVIDIA's revenue is expected to maintain strong growth, Analysts generally predict that the growth rate will slow down in the coming quarters, dropping to around 45% by the second half of next year.

The leader in electric vehicles, Tesla, has seen its stock price rise by 74% this year, second only to NVIDIA among the seven major technology giants. Tesla faced a severe sell-off this year due to slowing demand for electric vehicles, but the stock surged following the victory of Trump, who has strong support from Tesla CEO Elon Musk, in the US presidential election. The market is betting that Tesla will greatly benefit from the relationship between Musk and Trump.

In contrast, Microsoft has only risen by 15% this year, far behind other tech giants and even underperforming benchmark indices such as the S&P 500 Index and Nasdaq. Microsoft's recent quarterly guidance fell short of market expectations, affecting investor confidence. Additionally, Microsoft's massive investments in AI startups have also dragged on profits.

Overall, global investors continue to pour into the seven major tech giants in 2023 and 2024, betting that the giants' substantial market size and financial strength will put them in the best position to leverage AI technology to increase revenue.

Notably, this year several American tech companies, including Google and Meta, have launched quarterly dividend plans for the first time. Although the dividend yield is not high, the news of dividends and buybacks has continuously driven a surge in the US stock market. Meanwhile, tech giants are also continually adjusting operations to improve profits, with fundamentals being 'solid as a rock.'

AI stocks are characterized by a stark contrast in performance.

AI remains one of the strongest narratives in the technology sector, but related trading seems to have entered a new phase. Investment and trading in AI are shifting from initial frenzy to a more rational and cautious attitude, meaning that investors and companies are more focused on the actual effects and profitability of AI technology rather than just chasing concepts. In this context, it is not surprising that there is a clear differentiation in the performance of AI stocks.

Apart from the 'most powerful shovel seller' NVIDIA, several semiconductor manufacturers have seen significant stock price increases this year, with Broadcom (AVGO.US) rising 120%, Taiwan Semiconductor (TSM.US) up 97%, and Marvell Technology (MRVL.US) climbing 89%. However, due to slowing demand and political disruptions, lithography giant ASML (ASML.US) has fallen by 5% this year, Advanced Micro Devices (AMD.US) is down 15%, and Intel (INTC.US) has plummeted by as much as 59%.

As technology continues to mature and application scenarios expand, investors' focus is gradually shifting from the traditional semiconductor industry to software companies.

The "AI Super Bull Stock" AppLovin (APP.US) has seen its stock price increase by 741% this year, far exceeding other technology companies. The advertising marketing giant's valuation surged from about 13 billion USD at the beginning of the year to over 110 billion USD, surpassing Starbucks (SBUX.US), Intel, and Airbnb (ABNB.US).

AppLovin provides global enterprises with AI-based "AI + advertising marketing solutions." The latest earnings report shows that AppLovin's revenue for the third quarter is approximately 1.198 billion USD, a year-on-year increase of 39%; net income reached as high as 0.434 billion USD, a staggering 300% increase compared to last year.

Big Data analysis software giant Palantir (PLTR.US) has seen its stock price rise by 360% this year. The company reported third-quarter results that exceeded expectations and raised its full-year guidance, giving investors a positive outlook on the company's AI development.

Additionally, AI application software stocks such as DocuSign (DOCU.US) and ServiceNow (NOW.US) have also drawn investors' attention, with stock prices rising by 56% and 53%, respectively. In contrast, Adobe (ADBE.US), facing the risk of AI "taking jobs away," saw its stock price plummet by 25%.

Nuclear power has also become one of the hottest investment themes this year. The rise of AI and the increasing energy consumption of data centers mean that the future of nuclear energy appears closely linked to the seemingly unstoppable rise of large technology companies. This year, NANO Nuclear Energy (NNE.US) surged by 570%, NuScale Power (SMR.US) rose nearly 500%, Vistra Energy (VST.US) and Talen Energy (TLN.US) both increased by over 200%, while Graham (GHM.US) and Oklo Inc (OKLO.US) each rose by over 100%.

"Trump trade" rises: Cryptos and financial stocks soar together.

With Trump's victory in the November U.S. presidential election, financial markets welcomed a wave of "Trump trades." The market reacted positively to the clear commitment to economic growth and tax cuts, with the three major U.S. stock indices hitting record highs, and the performance of the crypto and financial stock sectors stood out.

In the cryptocurrency arena, Trump's victory ignited a frenzy. The market anticipates that the Trump administration will adopt friendlier regulatory policies toward the cryptocurrency industry, driving Bitcoin prices to break historical highs, surging to a peak of 0.11 million USD. Several cryptocurrency-related stocks also skyrocketed, including "Bitcoin big player" MicroStrategy (MSTR.US) which surged by 420% this year, Hut 8 (HUT.US) rose by 67%, Coinbase (COIN.US) increased by 53%, and Robinhood (HOOD.US) soared by 206%.

After Trump won the US election, US bank stocks surged as investors bet that Trump would deliver on his promises to lower taxes and relax banking regulations. The KBW Nasdaq Bank Index, which tracks the 24 largest banks in the US, has risen 34% year-to-date, with JPMorgan (JPM.US) up as much as 45% and Wells Fargo (WFC.US) nearly 50%, both of which reported third-quarter results that exceeded expectations. In contrast, Bank of America (BAC.US) rose 35%, lagging behind other peers. Bank of America's net income in the third quarter fell 12% year-on-year, compounded by continued Shareholding reductions by Berkshire Hathaway Inc. (BRK.A.US) in Bank of America stocks, which weighed on the stock's performance.

Notably, during this round of "Trump trade" frenzy, Tesla has performed remarkably, having surged 39% since election day, adding over $300 billion in Market Cap, mainly due to Musk's close relationship with Trump. The market generally believes that the Trump administration may reduce tax incentives for electric vehicles, while Tesla, benefiting from its scale advantages, is expected to gain a larger market share in a non-subsidized environment. At the same time, Trump's tariff policies could further enhance Tesla's competitiveness in the US market, as Tesla has a relatively complete supply chain in the US.

The cruise sector has quietly made substantial profits.

Although US technology stocks and Cryptos have overshadowed the spotlight, the relatively low-profile cruise stocks have proven their notable investment value with solid growth and outstanding market performance.

Viking Holdings (VIK.US) has seen its stock price rise 85% since its listing in May this year, while Royal Caribbean (RCL.US) has increased 81% after soaring 162% last year. Norwegian Cruise (NCLH.US) and Carnival Corporation (CCL.US) have also continued their upward trend, rising 35% and 29% respectively this year.

This trend reflects strong consumer demand for cruise travel, especially after the pandemic, as people's desire for Leisure tourism has driven a rapid recovery in the cruise industry.

Additionally, the robust recovery in travel demand has propelled US Aviation/airlines Industry stocks to achieve their best performance in nearly a decade. So far this year, the S&P Composite Airline Index has risen 60%, far surpassing the 25% increase of the S&P 500 Index, marking the first time since 2014 that the airline industry index has significantly outperformed the broader market. Among them, United Airlines (UAL.US) performed the best, with its share price soaring 142% this year, making it the fifth-largest gainer in the S&P 500 Index.

The Energy, Pharmaceuticals, and other sectors appear to be lackluster.

Although the overall market in the USA is heated, the performance of the Energy, Medical Care, and Materials sectors is far inferior to the Large Cap, with gains this year all below 5%.

In 2024, international oil prices are showing a downward trend, and the market holds a cautious attitude towards future oil prices, which has dragged down the performance of the Energy sector. Among them, boosted by Trump's election victory, Exxon Mobil (XOM.US), the number one holding in the Energy Index ETF (XLE), has seen its stock price rise by 10% this year, while the second largest holding, Chevron (CVX.US), has only increased by 0.7%, and the third largest holding, ConocoPhillips (COP.US), has plummeted by 14%.

The Medical Care sector continues to experience the sluggish market conditions of the past two years, but Eli Lilly and Co (LLY.US) has achieved a rise in stock price due to its best-selling weight loss drug. The stock already rose by 61% last year and has increased by another 35% this year so far. However, due to intensified industry competition and the sales of weight loss drugs not meeting expectations, Eli Lilly's stock price has seen a significant pullback after reaching an all-time high of $970.9, currently down 20% from the peak. Eli Lilly's main competitor, Novo-Nordisk A/S (NVO.US), has seen its stock price fall by 15% this year, as the trial results for the next-gen weight loss drug Cagrisema did not meet expectations, leading to a market sell-off.

The Materials sector ETF (XLB) has become the "bottom performer", with stocks like Freeport-McMoRan (FCX.US), Newmont (NEM.US), and Nucor (NUE.US) all declining this year, dragging down the sector's overall performance. Global demand fluctuations, Europe's economy nearing recession, and US tariff policies have put pressure on industrial metals and other commodities.

The IPO market is gradually recovering.

In 2024, the IPO market in the USA is gradually recovering. According to StockAnalysis, there have been 224 companies that have gone public this year, a 45% increase from 154 in 2023, but still far below the historical peak set in 2021. A total of 1,035 IPOs were conducted throughout 2021, setting a new record, breaking the previous record of 480 IPOs in 2020.

According to data from Renaissance Capital, after excluding special transactions such as small IPOs with fundraising amounts not exceeding 5 million dollars or companies with market capitalizations not exceeding 50 million dollars, there were a total of 148 IPOs in the US stock market throughout the year, raising 29.6 billion dollars, an increase of over 50% in amount. Due to the Federal Reserve's slowdown in interest rate cuts and market turmoil, companies have repeatedly postponed their IPO timelines.

A recent report from Renaissance Capital shows that the proportion of larger issuers in IPO activity is increasing, with 58 IPOs raising 0.1 billion dollars or more, nearly double that of last year. Five companies raised 1 billion dollars or more, with the world's largest cold storage operator, Lineage (LINE.US), raising 4.4 billion dollars, making it the largest IPO in the US this year, followed by Viking Holdings (VIK.US) and StandardAero (SARO.US), which raised 1.5 billion dollars and 1.4 billion dollars, respectively. New stocks that raised over 0.1 billion dollars performed excellently, with an average ROI of 26%, while the overall ROI for new stocks in 2024 was -3%.

As of December 27, here are the best-performing new stocks of the year:

Among them, the nuclear energy company NANO Nuclear Energy has surged 570% since its listing, and the MEME stock craze has propelled Reddit (RDDT.US) to rise by 410%.

Outlook for the US stock market in 2025

In 2024, the bull market in US stocks unexpectedly continued, breaking Wall Street's skepticism. Despite increasing global political and economic uncertainties, the three major US indexes have continuously set new historical records. Technology stocks continue to lead the market, AI stocks are showing mixed results, while the 'Trump trade' is popular in the market. Meanwhile, sectors like energy and pharmaceuticals have lost their luster. After a period of stagnation, the US IPO market is gradually recovering, bringing new investment opportunities to investors.

Looking to the future, analysts from major Wall Street firms predict an average increase of about 10% in the S&P 500 Index next year, which aligns with historical averages.

After Trump's election as President of the USA, he proposed radical trade policies and business regulatory reforms, leading to business uncertainty and inflation concerns. Nonetheless, analysts believe the negative impact will be limited, as Trump's policies may be more moderate, and low tax rates and deregulation will offset adverse factors. The US economy is expected to continue to grow, with rising corporate profit margins, especially among non-tech giant companies. Analysts acknowledge that US stock valuations are high, but returns in 2025 will rely more on earnings growth than on valuation expansion.

Overall, despite uncertainties, the fundamentals of the US stock market remain solid, and analysts maintain an optimistic view of the outlook.

Which sectors and stocks are worth paying attention to?

In terms of sectors and stocks, technology stocks remain the market focus, particularly the seven tech giants: Google, Amazon, Apple, Microsoft, Meta Platforms, NVIDIA, and Tesla. These companies are expected to continue playing a leading role in the market, thanks to their leadership in the AI field and significant influence on global macro trends.

Wedbush's renowned analyst Dan Ives optimistically predicts that Apple may be the first to reach a market cap of 4 trillion USD in 2025, followed by NVIDIA and Microsoft. Ives stated that globally, there are 0.3 billion iPhones that have not been upgraded for over four years, presenting Apple with an unprecedented upgrade demand opportunity.

After the US election day, Ives raised Tesla's target price from 400 USD to 515 USD. He remarked, "We estimate that AI and autonomous driving opportunities are worth at least 1 trillion USD for Tesla, and we are fully confident that under Trump’s administration, these key plans will accelerate." Ives believes that in a 'Bull Market' scenario, Tesla's stock price could soar to 650 USD by 2025, about 50% higher than current levels.

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