US Equities Shine in 2024 as Investor Capital Floods the Market

Highlights:

• The S&P 500 saw a 23% gain in 2024, following a 24% increase in 2023, marking its best two-year performance since 1998, outpacing Australia’s S&P/ASX 200 Index.
• US mega-cap companies like Nvidia, Apple, and Meta drove the market’s success, fueled by AI advancements and the Federal Reserve’s interest rate cuts.
• Experts, including Nick Griffin of Munro Partners, predict continued market strength in 2025, with the potential for a "three-peat" bull run driven by AI and political shifts.

US Market Outpaces Global Peers in Back-to-Back Growth

At the time of writing, investor capital is surging into US equities, with the S&P 500 Index marking an impressive 23% gain in 2024, following a 24% rise in the previous year. This marks the best two-year return for the S&P 500 since 1998, delivering a cumulative gain of more than 50%. This performance starkly contrasts with Australia’s S&P/ASX 200 Index, which saw a much smaller 15% increase over the same period. The strong performance of US mega-caps, such as Nvidia, Apple, and Meta, propelled by ongoing advancements in artificial intelligence (AI) and interest rate cuts from the US Federal Reserve, helped to fuel this growth.

AI and Political Shifts Drive Market Confidence

The rapid growth of AI-driven companies has become a central theme of the market rally, with chipmaker Nvidia and iPhone manufacturer Apple leading the charge. The hype around AI technology has pushed investor sentiment to new heights, alongside a shift in the political landscape. Following the Republican win in the 2024 elections, there are growing expectations that regulatory changes under a potential Trump administration could further boost corporate earnings. These political shifts and the broader AI boom are creating a potent combination, encouraging investors to bet on continued strength in the US market.

Experts Predict Further Gains in 2025

Nick Griffin, the Chief Investment Officer of Munro Partners, a global equities manager based in Melbourne, has expressed confidence that the bull market could continue into 2025. Griffin, whose firm manages $5.5 billion in global shares, suggests that while bull markets typically last for three to five years, there is still more growth to come in this cycle. He sees the ongoing AI boom as a key driver, with the potential for even more gains ahead. Despite previous market challenges, including the 2022 sell-off due to inflation, the outlook for 2025 remains positive.

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