After a strong opening, the three major indexes dipped slightly. As of the time of reporting, the Dow Jones is up 0.55%, the Nasdaq Composite Index is up 0.18%, and the S&P 500 Index is up 0.33%.

The US stock market achieved significant gains in 2024. The S&P 500 Index rose over 23% for the year, marking the second consecutive year with gains exceeding 20%. The Dow Jones increased by nearly 13%. Fueled by enthusiasm for AI and interest rate cuts, the Nasdaq Composite Index outperformed with a gain of 29%.

Analysts pointed out that the rise of the US stock market in 2024 is driven by multiple factors, with the most significant being that the Federal Reserve has finally begun a rate-cutting cycle, the AI boom pushing technology stocks higher, and Trump's victory.

The Magnificent Seven, the seven giant tech stocks, are the main driving force behind the sharp rise of US stocks in 2024. NVIDIA, the darling of AI Chips, surged 171% in 2024, while Apple, the iPhone manufacturer, increased by 30%.

However, after significant gains, the US stock market saw some profit-taking by the end of 2024. The S&P 500 Index fell for four consecutive trading days at the year's end, a first since 1966.

The weak performance of US stocks at the end of last year implies that the 'Christmas Rally' will be difficult to achieve.

'Christmas Rally' is a well-known market concept that refers to the tendency for major stock indexes to rise during the last five trading days of December and the first two trading days of January of the following year. According to the Dow Jones market data that dates back to 1950, the index has averaged a rise of 1.3% during this period and recorded gains almost 80% of the time.

In 2024, the rise of the US stock market is led by Technology stocks, a nature that makes some investors worry about the sustainability of this rise. Many in the investment community believe that while the US stock market will further rise next year, it will not reach the levels of 2023 and 2024. Analysts point out that there are also adverse factors such as the Federal Reserve implying a slowdown in interest rate cuts and uncertainties regarding the overall impact of Trump's policies.

Keith Lerner, Co-Chief Investment Officer at Truist, stated: 'We expect that the bull market in stocks (whether in terms of price or duration, lagging behind a typical upward cycle) will be sustained through continuous economic expansion, which will enhance corporate profits, ease monetary policy, and continue to provide fiscal support.'

Lerner mentioned: 'These positive factors are partially offset by rising market valuations and investor optimism, indicating that the threshold for positive surprises has already risen. These factors, combined with broader policy outcomes, suggest that this year's market movements are more tumultuous compared to the past year. Investors should seek to capitalize on opportunities that may arise in an ongoing upward trend.'

However, more optimistic investors point out that continued economic strength and profit growth will still provide room for the US stock market to rise.

Jonathan Golub, an analyst at UBS Group, indicated in a Research Report: 'Some believe the major driving forces behind a surge in the US stock market in 2024 are irrational exuberance, animal spirits, and bubble-like optimism, but strong economic data and moderate recession risks seem to largely contradict this claim.'

Golub stated: 'In any case, it is clear that as we enter 2025, investors are generally extremely optimistic. Perhaps this excessive optimism is precisely the reason for concern, but 2025 could be another year of significant gains.'

Goldman Sachs has lowered its prediction for the Federal Reserve's interest rate cuts in 2025, from the original 100 basis points to 75 basis points. The bank's report pointed out that the market has exaggerated the reports regarding a fundamental rebound in inflation.

Goldman Sachs stated in its report that the year-on-year increase in core Personal Consumption Expenditures (PCE) inflation from September to November last year was 2.5%, slightly higher than the 2.3% seen in the previous three months but still lower than the 2.8% year-on-year increase, indicating that inflation levels are still in line with a continuing downward trend.

The Goldman Sachs report also pointed out that the average PCE inflation adjusted by the Dallas Fed indicates that the annualized PCE inflation from September to November last year was 2.4%, while the November data was 1.8%, further confirming signs of falling inflation.

The Goldman Sachs report believes that as the labor market tightens back to 2017 levels, the annual wage growth rate has slowed to 3.9%, within the range of 3.5% to 4%. The report predicts that if productivity growth remains between 1.5% and 2% in the coming years, it will align with the 2% inflation target.

On Thursday, economic data showed that the US Department of Labor reported that for the week ending December 28, 2024, the number of initial unemployment claims was 0.211 million, expected to be 0.222 million. The previous week’s initial unemployment claims were revised from 0.219 million to 0.22 million.

The four-week moving average for initial unemployment claims for the week ending December 28 was 0.22325 million, with the previous value slightly revised from 0.2265 million to 0.22675 million.

For the week ending December 21, the number of continued unemployment claims was 1.844 million, expected to be 1.89 million, with the previous value revised down from 1.91 million to 1.896 million.

US domestic security issues have once again come under scrutiny. Less than a month before President Trump is to be inaugurated, the New Year's celebrations in New Orleans were struck by a truck, resulting in at least 15 deaths. At the same time, a fatal explosion occurred outside the Trump hotel in Las Vegas involving a Tesla Cybertruck, which is currently under investigation by the FBI.

Focus on individual stocks

Growth Tech stocks were mixed, with Tesla falling nearly 5%, Apple down over 2%, while NVIDIA, Broadcom, Amazon, and others rose.

Crypto concept stocks generally rebounded, with MSTR and MARA rising over 5%, and CleanSpark up more than 4%.

Quantum Computing concept stocks rose slightly, with RGTI up nearly 3%, SEALSQ Corp up over 11%, and MicroCloud Hologram rising over 20%.

$Tesla (TSLA.US)$ Falling nearly 5%, Q4 delivery volume was 0.4956 million units, below market expectations, with annual Autos delivery volume declining for the first time in over a decade.

$NVIDIA (NVDA.US)$ Rising nearly 1%, news reports that it has established an ASIC department and plans to recruit thousands of chip design, Software Development, and AI R&D personnel.

$Unity Software (U.US)$ Shooting up over 9%, Keith Gill, known as the "leader of retail investors in the US stock market," released a picture indirectly referring to Unity.

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