U.S. Equities Surge in 2024, Caution Looms for 2025

U.S. equities posted a stellar performance in 2024, with the S&P 500 gaining 23.3%, the Nasdaq surging 28.6%, and the Dow Jones rising 12.9%. This marked the strongest two-year run for the S&P 500 since 1997-1998, driven by optimism surrounding artificial intelligence (AI), lower interest rates, and resilient economic growth. However, markets lost momentum in December amid concerns over fewer-than-expected Federal Reserve rate cuts, elevated valuations, and political uncertainties surrounding President-elect Donald Trump’s policies on tariffs and deregulation.

Technology and communication services led sector gains, supported by optimism surrounding AI, while materials underperformed. Nvidia (NASDAQ:NVDA) emerged as a standout, soaring 178% amid strong demand for AI-related technologies. However, profit-taking in December slightly curbed its earlier gains.

Tesla (NASDAQ:TSLA) achieved a 68% gain in 2024, driven by advancements in electric vehicles and energy storage solutions. However, a 3.2% drop followed a Cybertruck explosion in Las Vegas, highlighting short-term volatility. Despite this setback, Tesla’s Shanghai energy storage gigafactory entering trial production underscores its long-term growth potential.

Boeing (NYSE:BA) faced setbacks after a fatal airline crash in South Korea prompted emergency inspections of its fleet. Heightened safety concerns weighed on its stock performance, reflecting broader market caution heading into 2025.

United States Steel Corp (BVMF:USSX34) rose 9% following news that Nippon Steel made concessions to secure U.S. government approval for its $14.9 billion acquisition of the company. The proposal included giving the U.S. veto power over production cuts, easing concerns about domestic supply stability.

Cryptocurrency markets showed speculative strength, with Bitcoin surging 122%, underscoring investor appetite for alternative assets despite broader market uncertainties. Cryptocurrency-related stocks, including Coinbase, Marathon Digital, and MicroStrategy, experienced sharp volatility. Early gains faded as fluctuations in cryptocurrency markets introduced uncertainty heading into 2025.

Mid-cap stocks gained favor as analysts highlighted their solid fundamentals and lower policy risks compared to mega-caps, which were viewed as overvalued. In contrast, small-cap stocks struggled due to weak earnings and refinancing challenges, positioning mid-caps as a safer option for 2025.

Despite end-of-year weakness, investor sentiment remains cautiously optimistic for 2025. Projections suggest moderate gains of around 10%, supported by stable economic conditions and expected corporate earnings growth of 10.7%.

Bond yields rose amid inflation worries and expectations of higher government borrowing under Trump’s administration. The 10-year Treasury yield climbed to 4.64%, reflecting investor caution.

Looking ahead, analysts emphasize the need for caution amid stretched valuations and policy uncertainties. While AI-driven growth and economic resilience may support gains, inflation risks, tariff policies, and geopolitical challenges could introduce volatility. Investors are advised to balance optimism with prudent risk management as markets navigate a complex environment in 2025.

Data for Technical Analysis (1H) CFD US 500 [S&P 500]

Resistance : 5878.3, 5884.1, 5887.8         

Support : 5908.9, 5903.1, 5899.4             

1H Outlook

Source: TradingView 

Buy/Long 1 If the support at the price range 5898.9 - 5908.9 is touched, but the support at 5908.9 cannot be broken, the TP may be set around 5902.6 and the SL around 5893.9, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 5878.3 - 5888.3, TP may be set around 5923.0 and SL around 5882.8, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 5878.3 - 5888.3 is touched, but the resistance at 5878.3 cannot be broken, the TP may be set around 5887.3 and the SL around 5893.3, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 5898.9 - 5908.9, TP may be set around 5862.0 and SL around 5904.4, or up to the risk appetite.       

Pivot Points Jan 2, 2025 02:06AM GMT