For investors, 2024 was a remarkable year, especially for those who placed their bets on the right assets. Large-cap tech stocks, broad index funds, and even alternative investments like gold, silver, and bitcoin delivered stellar returns. However, the story was far from rosy for bond investors, small business owners, and certain sectors like housing and retail.
Let’s break down the highlights, the struggles, and what we can anticipate heading into 2025.
Biggest Market Winners of 2024
If you invested in large-cap tech stocks or ETFs tracking the S&P 500 and Nasdaq Composite, it’s been a banner year. Both indices soared more than 20% for a second consecutive year, cementing the dominance of tech-heavy portfolios.
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Tech Giants and Game-Changers
- MicroStrategy (MSTR): Up a jaw-dropping 422%, fueled by Bitcoin’s resurgence.
- Palantir Technology (PLTR): Up 361%, as AI-driven solutions gained widespread adoption.
- Nvidia (NVDA): Delivered a 177% rise, driven by the growing demand for AI chips.
- Meta Platforms (META): Up 70%, thanks to advances in augmented reality and AI integration.
- Apple (AAPL): While a comparatively modest 32.8% increase, its market cap soared to $3.86 trillion, with analysts predicting it could cross $4 trillion in 2025.
Surprise Performer
- AppLovin (APP): The year’s top performer with an astounding 741% gain, driven by its mobile gaming and software solutions that help businesses connect with customers.
Challenges in Small-Cap and Other Stocks
While large-cap stocks thrived, small-cap stocks in the Russell 2000 struggled, rising just 10.7%. Despite this, optimists believe these stocks could see a resurgence in 2025 as investors diversify into smaller companies.
Notable Declines
- Super Micro Computer (SMCI): Once a star with a 255% gain in Q1, the stock plummeted 90% due to financial instability.
- Intel (INTC): Down 59%, as competition in the semiconductor space intensified.
- Walgreens Boots Alliance (WBA): Suffered a 63% drop, leading to its removal from both the Dow Jones Industrial Average and the S&P 500. The company is now exploring privatization.
The Bond Market and Inflation Woes
The Federal Reserve’s rate cuts between September and December, dropping the key interest rate to 4.25%-4.5%, initially buoyed bond prices. However, skepticism over inflation, deficits, and the incoming Trump administration’s fiscal policies led to a reversal.
- 10-Year Treasury Yield: Dropped to 3.62% in September but climbed to 4.63% by year’s end.
- Inflation: The Fed’s efforts to bring inflation down to 2% continue, but persistent price pressures remain a challenge.
Alternative Investments: Gold, Silver, and Bitcoin
Investors seeking safe havens found opportunities in precious metals and cryptocurrencies:
- Gold: Peaked at $2,801.80/oz in October before settling at $2,636.50, a 27% annual gain.
- Silver: Rose 45.6% to $35.07/oz before retreating to $29.98.
- Bitcoin: Continued its rally, significantly boosting companies like MicroStrategy.
The Housing Market: A Rollercoaster Ride
The once-booming housing market faced significant headwinds as mortgage rates remained volatile:
- 30-Year Fixed Mortgage Rates: Peaked at 8% in October 2023, briefly dipped to 6% in September 2024, but are now climbing toward 7% again.
- Home Sales: Stalled as high rates deterred buyers.
- Homebuilder Stocks: Suffered, with the iShares Dow Jones U.S. Home Construction ETF (ITB) down 8.7% in December alone.
However, Wells Fargo predicts a more favorable housing market in the second half of 2025, driven by potentially lower rates.
A Mixed Year for Small Businesses
While the broader economy thrived with a 4% unemployment rate and rising incomes, small businesses faced challenges. Bankruptcy filings have been rising since 2022, with retail and restaurant owners particularly affected.
Geopolitical and Policy Uncertainty in 2025
Looking ahead, the economic landscape is clouded by:
- Geopolitical Tensions: Continued conflicts in the Middle East, East Asia, and the Ukraine-Russia War.
- Trump’s Economic Policies: Uncertainty around tariffs and immigration reforms could have ripple effects across industries.
What’s Next for Investors in 2025?
Wall Street remains optimistic:
- The S&P 500 is expected to rise further, with some analysts targeting 7,000 points.
- Small-cap stocks could rebound as investors seek undervalued opportunities.
- Housing and Bonds: Improved stability in the bond market and lower mortgage rates could bring relief to these sectors.
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However, history serves as a cautionary tale. In 2007, few foresaw the crash of 2008, despite early signs of trouble. Investors should remain vigilant while capitalizing on opportunities.
Key Takeaway
For those who navigated the highs and lows of 2024, it was a year of growth and surprises. While large-cap tech stocks and alternative investments delivered unparalleled returns, challenges in housing, small-cap stocks, and small businesses highlight areas to watch in 2025.
What’s your investment strategy for 2025? Share your thoughts and predictions in the comments below!
