AI Boom and Fed Rate Cuts Propel U.S. Stocks to New Heights in 2024
U.S. stocks are soaring in 2024, driven by AI advancements and anticipated Fed rate cuts, marking a strong finish to the year.
U.S., Stocks, AI, Federal Reserve, Nvidia, Donald Trump, Bitcoin
New York: U.S. stock index futures are looking up as 2024 wraps up. It’s been a wild ride, with the market on a bull run for over two years. The economy is showing signs of bouncing back post-pandemic, and there’s a lot of excitement about lower borrowing costs and the AI boom.
The S&P 500, Dow, and Nasdaq are all nearing record highs, and it seems like they’re set to finish the year strong for the second year in a row. A significant interest rate cut by the Federal Reserve this year, along with a tech stock rally, has really fueled this surge.
Tech, communications, and consumer stocks have jumped over 30% this year. Nvidia, the poster child for AI, has seen its stock rise nearly 170% this year, helping it reach a whopping $3 trillion in market value. Tesla is back in the trillion-dollar club too!
As of early morning trading, Dow E-minis are up 90 points, S&P 500 E-minis are up 17 points, and Nasdaq 100 E-minis are up 75.25 points. Nvidia is up 0.7%, and Tesla has added 1.6% in premarket trading. But with the New Year’s holiday coming up, trading volumes are a bit thin.
Some folks are starting to wonder if the AI rally will eventually cool off. But so far, those predicting a market correction have been proven wrong. Analysts have been raising their price targets all year long.
As the year comes to a close, risk-taking is on the rise, especially after Donald Trump’s presidential win. Many are betting he’ll follow through on promises to ease regulations and cut taxes, which is good news for domestic businesses.
This has also been a boost for small-cap stocks, with the Russell 2000 hitting a record high and looking at a 10% rise for the year. Banks are also doing well, up over 30% this year.
However, December has been a bit rocky for equities, with the S&P 500 facing its biggest monthly decline since April. Higher Treasury yields are causing some concern, especially with the Fed being cautious.
The yield on the 10-year note has dropped from its seven-month high to 4.5%. Traders are anticipating the Fed’s first rate cut of 2025 could come in March or May.
Trump’s win has also given a boost to crypto stocks, with Bitcoin prices hitting $100,000. MicroStrategy’s shares have more than tripled this year as they keep buying Bitcoin. Other stocks like Coinbase and MARA Holdings are also seeing gains.
But not every sector is thriving; materials stocks are down over 2%, mainly due to economic issues in China, the top consumer of metals.