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Reflecting on 2024: Market Highlights and Lowlights Ahead of a New Year
As we embrace the New Year, it’s natural to contemplate our resolutions and the possibilities that lie ahead. Before the holiday season, I shared some predictions for 2025, which you can find detailed here.
However, to truly welcome the New Year, it is essential to take a moment to reflect on the past year’s market events—both the positive and the negative.
In this edition of Market 360, I will discuss three standout highs and three significant lows from 2024. Additionally, I’ll offer strategies for positioning yourself to profit in 2025.
Let’s dive in…
Top Highlight #1: The Federal Reserve Cuts Interest Rates
One of the most significant events was the Federal Reserve’s decision to cut interest rates three times throughout the year. Their main goal was to control inflation, targeting a rate of 2%. Although inflation never hit that mark in 2024, the Fed grew increasingly concerned about the job market.
Additionally, the Fed aimed to align its target rate with the bond market, particularly the 10-year Treasury yield, which remained out of sync for much of the year. As such, they implemented three rate cuts in 2024 after an extended hiatus.
The first substantial cut came on September 18, introducing a surprising 0.5% reduction—the first in four years—marking a significant policy change.
On November 7, another unanimous decision followed, cutting rates by 0.25% due to labor market concerns while noting that inflation was still “somewhat elevated.”
Finally, on December 18, the Fed enacted a further 0.25% cut, bringing the current federal funds rate range to 4.25% to 4.5%.
A noteworthy takeaway from the latest Fed meeting was the modified “dot plot” forecast, now suggesting two rate cuts in 2025, down from the previously anticipated four. However, it’s important to remember that the Fed’s foresight is limited, and more cuts might still occur if market conditions demand them. For a deeper dive into my views on this, check out my recent Market 360 updates.
Top Highlight #2: Market Surges Following Trump’s Re-Election
The conclusion of the presidential election in 2024 brought a collective relief to the markets. Regardless of individual candidate preferences, the market craved certainty. As the election results indicated Donald Trump’s victory, Wall Street responded positively.
My previous assertion about Pennsylvania being the key to the election outcome proved correct, with Trump securing victories in important swing states like Georgia, Michigan, Wisconsin, Ohio, and Pennsylvania. He even increased his vote share across all counties compared to the 2020 election.
This reduction of political uncertainty led to a significant market rally; the S&P 500 rose approximately 6.5%, the NASDAQ climbed 10.0%, and the Dow gained 7.5%, although some of these gains tapered off by year-end.
Top Highlight #3: Continued Growth of the AI Sector
Another key theme in 2024 was the unwavering momentum in the AI sector, which shows no signs of waning.
NVIDIA Corporation (NVDA) unveiled its new Blackwell chip in March, marking a revolutionary upgrade over its predecessor, the Hopper chip, solidifying NVIDIA’s prominence in the market. I previously discussed why I consider NVIDIA a top stock for this decade.
In early December, a collaboration between Elon Musk, NVIDIA, Super Micro Computer, Inc. (SMCI), and Dell Technologies Inc. (DELL) to enhance Musk’s supercomputer Colossus captured attention as well. This partnership signals a growing interest and investment in AI technologies.
The ongoing advances in AI are evidently a transformative force, promising to generate substantial returns for investors in 2025.
Top Lowlight #1: AI’s Impact on Labor Relations
Shifting to the lows of 2024, a major setback occurred when the International Longshoremen’s Association (ILA) initiated its first significant strike since 1977 in October.
Although much of the media focused on the union’s demands for a 77% pay increase, the central issue underscored the tension between automation and labor. The longshoremen were advocating for a complete ban on automation, a request that seems unrealisable in our technology-driven world.
This highlight underscores a recurring theme: automation and AI are not going away. While job security may currently be intact, the friction between advancing technology and labor cannot be ignored and will likely resurface in future discussions.
Top Lowlight #2: Super Micro Faces Scrutiny
In late August, Super Micro Computer drew considerable negative attention due to a report from short-seller Hindenburg Research alleging financial misconduct.
The uncertainty driven by these claims raised fears of potential delisting from the NASDAQ. Fortunately, an independent investigation concluded no fraud had occurred, allowing Super Micro to avoid immediate delisting after receiving an extension to complete its paperwork.
Despite a rebound in the stock price since the initial drop of as much as 68%, the company faces challenges due to a significant backlog. High demand for its server solutions means some sales may take up to four to five years to fulfill. However, reports suggest that many customers remain committed to Super Micro, indicating potential stability ahead.
Top Lowlight #3: Rising Global Tensions
Throughout 2024, global tensions escalated, particularly in the Middle East and between Russia and Ukraine. With an estimated 40% of Ukraine’s population displaced and crucial infrastructure heavily damaged, recovery efforts will take years. Recently, Syrian President Bashar al-Assad sought refuge in Russia amid increasing instability.
Political and economic challenges in Europe have contributed to growing tensions, with signs pointing toward a looming recession as France and Germany prepare for upcoming elections with uncertain outcomes.
To put it simply, if President-elect Trump can effectively address these tensions, the U.S. could benefit significantly, reminiscent of the “peace dividend” experienced during Bill Clinton’s presidency in the 1990s after the Soviet Union’s collapse.
Preparing for Success in 2025
This summary highlights key highs and lows of 2024, but there is still much more to consider. We should now pivot toward positioning ourselves for success as we enter the New Year.
In the coming weeks, attention will shift to the inauguration of President-elect Donald Trump. His leadership could set the tone for potential market shifts and investment opportunities ahead.
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Expect a Surge in AI Investment: Key Companies to Watch
The upcoming actions from the office suggest that a series of executive orders may foster an even greater AI Boom.
Identifying Growth Opportunities
My Stock Grader (subscription required) has helped pinpoint several companies poised to benefit from this trend.
For a full breakdown of how to capitalize on these investment opportunities, watch my special presentation here.
(Already a Growth Investor member? Access the members-only website by clicking here.)
Sincerely,
Louis Navellier
Editor, Market 360
Start the New Year with Strategic Insights
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Disclosure of Interests
The Editor discloses ownership of the following securities as of this email:
NVIDIA Corporation (NVDA) and Super Micro Computer Inc. (SMCI)
