A 21% Return for the S&P 500 Wasn’t on Anyone’s 2024 Bingo Card

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31Dec

A 21% Return for the S&P 500 Wasn’t on Anyone’s 2024 Bingo Card

What a Year 2024 has been! Despite fears and trepidations, the stock market achieved an impressive 57 record highs as of December 20, 2024. Unsurprisingly, Wall Street analysts had a notably inaccurate outlook for the stock market this year. Last year, 14 different firms projected the S&P 500 would range between 4,200 and 5,400, with an average target implying a modest 3.9% return. As of December 20, 2024, the S&P 500 had delivered a striking 21.0% return.

Looking ahead to 2025, 24 firms currently predict the S&P 500 will range between 4,450 and 7,100 and with an average target of 6,513. This implies a 9.8% return based on the December 20, 2024, closing price. While these predictions offer interesting perspectives, the year ahead remains as unpredictable as ever.

The market faced several significant challenges this year, including:

  • The 2024 Presidential Election Cycle: This eventful cycle included assassination attempts and the incumbent president seeding the nomination only months before the election.
  • Sluggish International Economies: Economies outside the U.S. struggled to maintain momentum.
  • Geopolitical Tensions and Wars: Ongoing conflicts involving Ukraine, Israel, and China added uncertainty to global markets.
  • Strikes in Key Sectors: Major industrial firms and ports faced labor disruptions.
  • Sticky Inflation and Shifting Monetary Policy: Inflation levels remained elevated, prompting evolving strategies from central banks.
  • Regulatory Pressures: Government scrutiny of major tech companies and tighter restrictions on mergers and acquisitions influenced corporate strategies.

Despite these headwinds, the market demonstrated resilience due to:

  • Strength of the U.S. Consumer and Economy: Consumer spending and economic activity remained robust.
  • A Slight Uptick in Unemployment: Unemployment rose modestly to 4.2% in November 2024, compared to 3.7% in November 2023, but remained historically low.
  • Declining Inflation: The November 2024 CPI reading of 2.7% marked a decline from 3.1% in November 2023 and 7.1% in November 2022.
  • AI Hype and Investment: The widespread enthusiasm for AI spurred significant investments in hardware, development, and research, particularly among leading global companies.
  • Sustained Productivity Growth: Non-farm productivity grew at 2.2% in Q3 2024, exceeding the 1.5% average from Q4 2007 to Q4 2019.

While I won’t attempt to predict the S&P 500’s performance for the next year, I will highlight that many of the U.S. economy’s strengths remain intact. The impact of the Trump administration’s policies—including deregulation, tax reforms, international trade strategies, and immigration measures—will take time to unfold and may evolve as final decisions are made. Despite the uncertainties, the foundational strengths of the U.S. economy provide reasons to remain optimistic in the years ahead.

Happy Holidays!

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Sheaff Brock Investment Advisors, LLC (“SBIA”) is an SEC-registered investment advisor founded in 2001. Clients or prospective clients are directed to SBIA’s Form ADV Part 2A prior to deciding to participate in any portfolio or making any investment decision. The views and opinions in the preceding commentary are subject to change without notice and are as of the date of the report. There is no guarantee that any market forecast set forth in the commentary will be realized. This material represents an assessment of the market environment at a specific point in time, should not be relied upon as investment advice, and is not intended to predict or depict performance of any investment. Any specific recommendations or comparisons that are made as to particular securities or strategies are for illustrative purposes only and are not meant as investment advice for any viewer. The companies mentioned in the publications may be held by Sheaff Brock Investment Advisors, Innovative Portfolios, Innovative Portfolios’ ETFs or any other affiliates or related persons. Therefore, there is a conflict of interest that the advisors may have a vested interest in the Companies and the statements made about them. Past performance does not guarantee or indicate future results.