
2024: The Year in Charts
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Here are the charts and themes that tell the story of 2024…
A 1.9% gain.
That’s what the top Wall Street Strategists were predicting for the S&P 500 in 2024.

The most bearish target came from JPMorgan, the biggest bank in the world with access to some of the smartest minds and more data and information than anyone else.
What did they foresee?
Lackluster earnings growth (2-3%), rising geopolitical risks, softening economic demand, and a price target of 4,200 with a “downside bias.”

Add to that the presidential election, and headlines saying the uncertainty it would bring was “bad for stocks.”

Suffice it to say that expectations for 2024 were unusually low. And as is often the case when that happens, an upside surprise was in the making.
It didn’t take very long for the bears to be proven wrong.
By the third week of January, the S&P 500 was back at an all-time high for the first time in two years.

It took 15 months and a 38% rally from the low in October 2022 to get there.

Investors learned once again that the stock market is not the economy, with the 28% bear market in 2022 occurring without a coincident recession.

While the market was back at new highs, the mood was far from rosy. Many were skeptical that this was the start of a new bull run as recession fears still lingered and some were calling for a bearish “double top.” Was this just the calm before the storm? We would soon find out.

By the end of March, the S&P 500 had already surpassed all but one of the Wall Street’s year-end predictions, rising to 5,254.

With a gain of over 10%, this was the 14th best start to a year in history.

The unrelenting rally continued in the second quarter and the S&P 500 ended the first half of the year at 5,460 (above all of Wall Street’s year-end targets), up 14.5%.


The gains continued in July and by early August it seemed like nothing could derail the move higher. But just when you least expect it, the market tends to throw a curveball at you.
On August 5, seemingly out of nowhere, a curveball came in from Japan. The Nikkei 225 Index fell 12.4%, its 2nd largest single day decline ever.

When combined with the losses from the previous session, the Nikkei was down 17.5%, surpassing the October 1987 crash to become the largest 2-day decline in its history. This was a 10-sigma event and a reminder once again that financial markets do not follow a normal distribution (tail events happen with much great frequency).

Fears over the unwinding “carry trade” spilled over into the US markets, and the Volatility Index ($VIX) spiked to over 65 on the morning of August 5, its highest level since March 2020.

This was the biggest correction of the year for the S&P 500 at just under 10%, with many saying the worst was yet to come.

But the fears never materialized and the S&P 500 would bottom on August 5 and never look back. As for the “unwinding carry trade,” it was soon forgotten, with the record net short position in the Yen moving to a net long position without any coverage or fanfare.

After aggressively tightening policy in 2022 and 2023, raising the Fed Funds Rate by 525 bps, the Fed reversed course in September 2024 with a 50 bps rate cut. It would cut rates two more times before year end, with a quarter-point reduction at both the November and December FOMC meetings.

The 100 bps in cumulative rate cuts brought the Fed Funds Rate down to a range of 4.25% to 4.50%.

While short-term bonds like the 3-month Treasury bill followed the Fed Funds Rate lower, longer-term yields actually moved in the opposite direction. The 10-year Treasury ended the year at a yield of 4.58%, up from a low of 3.63% in September and 3.88% at the start of the year.

Notably, this was the highest year-end level for the 10-year Treasury yield since 2006.


A rising 10-year Treasury yield was markedly different behavior than what we saw at the start of previous cutting cycles when the 10-year either moved lower or stayed roughly the same.

What was the bond market saying to the Fed?
a) You may be done with inflation but inflation is not done with you, and
b) the road back to the easy money policies of the past will not be an easy one.
Did the Fed get the message?
Perhaps. In their December 2024 projections, the Fed revealed higher expectations for inflation in 2025 (2.5% PCE) and fewer anticipated rate cuts (50 bps).

The bond market is pricing in the same, with a year-end Fed Funds Rate of 3.75%-4.00%. But whether that actually happens is anyone’s guess, for both the bond market and the Fed have a terrible track record in predicting the future.

V. The Least Affordable Housing Market in History
The exact same issues plaguing the US housing market at the start of 2024 were there at the end. Which is to say that the combination of high prices and high mortgage rates have frozen the housing market in time, with record lows in affordability constraining both supply and demand.
The average home price in the US continued to hit record highs throughout 2024 and is up over 50% in just the last 5 years. That’s more than double the increase in average US wages.

At the same time, the 30-year mortgage rate in the US has risen from 2.7% at the end of 2020 to 6.9% at the end of 2024. This was the 4th straight year of rising mortgage rates, something that hasn’t happened since 1978-1981.

The median household income necessary to purchase the median home for sale in the US ($118k) is over 49% higher than the current median household income ($79k). Needless to say, this is an untenable situation, but how and when this enormous gap will be closed remains to be seen.

VI. Everywhere You Look: Extremes
We ended 2024 at extremes across the investing landscape:
- Growth over Value: Growth stocks outperformed Value stocks by 19% in 2024, which followed 31% outperformance in 2023. This was the biggest 2-year outperformance of Growth over Value in history, surpassing the prior record from 1998-1999. The ratio of Growth to Value ended the year at its highest level since March 2000.


- Large Caps over Small Caps: Large Cap stocks outperformed Small Cap stocks by 13% in 2024, which followed 9% outperformance in 2023. This was the biggest 2-year outperformance of Large over Small since 1997-1998. The ratio of Large to Small hit its highest level since October 1999 during the year.


- Market Cap over Equal Weight: The S&P 500 outperformed the equal weight index by 12% in 2024 after 12% outperformance in 2023. The only consecutive years with a higher combined outperformance than 2023-24? 1998-1999.

- US over International: US Stocks (+25.0%) outperformed International Stocks (+5.3%) by nearly 20% in 2024, the biggest outperformance we’ve seen since 1997. US stocks have been outperforming international stocks for 16 years running, and by a huge margin. The result: we’re now more than 3 standard deviations above the mean in terms of historical US outperformance. The Ratio of Emerging Markets to US Equities hit a record low in 2024, breaking below the prior low from March 1999.



The biggest driver of the extreme outperformance from US Large Cap Growth stocks?
The Magnificent Seven, which continued to shine in 2024 led by Nvidia’s 171% gain.

Over the past two years, we’ve seen tremendous outperformance from these seven names relative to the S&P 500 and S&P 500 equal weight.

This has boosted their importance in the index with over a third of the S&P 500 now concentrated in the “Magnificent Seven” stocks, up from a fifth of the index two years ago. This is the largest share for any 7 companies in the index on record.

VIII. $2 Trillion More in Debt
In a year filled with surprises, rising National Debt wasn’t one of them. Everyone expected the debt to increase and increase it did, rising another $2.2 trillion in 2024. This follows increases of $2.6 trillion in 2023, $1.8 trillion in 2022, $1.9 trillion in 2021, and $4.5 trillion in 2020.

To say the US government is spending money like a “drunken sailor” would be an insult to drunken sailors who at least a) spend their own money and b) quit when they run out of funds.
In contrast, the US government has no constraints – they spend other people’s money and then spend even more, borrowing to close the gap. The current deficit of $2.1 trillion is a function of government spending ($6.9 trillion) far outpacing tax revenue ($4.8 trillion). Over the past decade, tax revenue has actually increased over 60%, a fact that would surprise many citizens. But this pales in comparison to the 99% increase in spending.

Total National Debt crossed above $36 trillion in November, over $13 trillion higher than where it stood just five years earlier (57% increase).

All of this debt is becoming increasingly costly to service, with the Interest Expense on US Public Debt rising to over $1.1 trillion, another record high. This is now more than what the Federal Government spends on National Defense.

The recession that many predicted at the start of 2024 never arrived.

Real GDP in the US came in above 3% annualized in both Q2 and Q3, exceeding the expectations of nearly all the economic forecasters.

That brings the US economic expansion to 54 months and counting, with most now expecting it to continue for at least another quarter.

The biggest factor helping keep the economy afloat?
Continued strength in the labor market, with jobs growth in every month of 2024 and now 48 months in row. This is tied for the second longest streak in history.

The US Unemployment Rate ended the year at 4.1%, still well below the historical average of 5.7%.

And wages have now outpaced inflation on a year-over-year basis for 19 straight months, giving a boost to the all-important US consumer.

And as long as the US consumer is employed and is seeing their wages outpace inflation, they will spend. The latest retail sales number confirms this, showing a 4.1% increase over the last year and 1.3% increase after adjusting for higher prices.

The S&P 500 ended the year up over 25% on a total return basis. This was the second consecutive year with return above 25%, something we haven’t seen since 1997-1998.

What propelled the US stock market higher?
Earnings and expectations.
S&P 500 operating earnings rose 9% during year to new record highs.

And on top of that growth we saw a multiple expansion of 13%, with the S&P 500’s P/E ratio moving up to 25.2x at year-end from 22.3x at the start of the year. Expectations for future growth are high, with the S&P 500’s P/E ratio now 36% above the historical median since 1989.

Expectations within the corporate bond market are lofty as well, with investors reaching for yield as if there will never be a default cycle again. Investment Grade spreads hit their tightest levels since July 1998 during the year (0.77%) while High Yield spreads hit their tightest levels since June 2007 (2.6%).

This spread tightening boosted credit-sensitive areas of the bond market to the top of the performance spectrum, with Emerging Market High Yield bonds (+12.1%), US Leveraged Loans (+8.2%), and US High Yield bonds (+8.0%) leading the way. On the other side, duration-sensitive areas fell due to the rise in long-term interest rates.

Overall, the US bond market eked out a gain of 1.3%.

It’s been a disastrous decade thus far in the bond market (-2% cumulative), but the future should be much brighter. The single best predictor of future bond returns is the starting yield. And with the 10-year Treasury yield nearing its highest level since 2007, prospective returns have dramatically improved as compared to where we stood just a few years ago (all-time low in yields during 2020).

The US 60/40 portfolio, which had been declared “dead” by many in 2022 when both stocks/bonds fell, rose 18% in 2023 and 15.5% in 2024.

Stocks have done the heavy lifting over the past seven years, responsible for nearly all of the 60/40 portfolio’s 8.8% annualized gain.

Within the S&P 500, all 11 sector ETFs finished higher led by Communication Services ($XLC) with a 34.7% gain.

The Dow hit at least one new all-time high for the 12th straight year, tying the record run from 1989 to 2000. But records are made to be broken, and we only need one all-time high in 2025 to break this one.

24 out of the 30 stocks in the Dow finished up on the year, with new member Nvidia leading the way. Amazon and Sherwin Williams were also added to the index, replacing Walgreens Boots, Dow, and Intel.

Like every year, there were winners and loser, but the number of winners far outpaced the number of losers in 2024.


Argentina led all country ETFs with a gain over over 63%, propelled higher by new hopes for the economy and the rapid decline in its monthly inflation rate (25.5% to 2.4%).


Inflation fell around much of the world with the median rate among major economies hitting 2.2% by the end of November, down from 3.7% at the start of the year.

With the exception of long-term Treasuries ($TLT), every major asset class ended 2024 in the green, led by Bitcoin’s 121% gain.

Bitcoin hit its first all-time high since November 2021 in early March, crossing above $69,000. It would go on to hit 39 more $1,000 milestones, peaking in December at over $108,000 before pulling back to end the year at $93,000.


The S&P 500 would end the year at 5,882, besting every major Wall Street firm’s price target by over 400 points. The S&P 500’s actual price gain of 23% was over 21% higher than the average forecast.

The S&P 500 would 57 all-time highs in 2024, the 5th most of any year in history.

All in all, it was a triumph of the optimists once more.
Those were the charts and themes that told the story of 2024. As always, the narratives followed prices.
As prices change in 2025, the narratives will surely change as well.
- Where will the S&P 500 end 2025?
- How about the 10-Year Yield?
- Where is Crude Oil headed?
- Is Gold or Bitcoin a better investment today?
- How many times will the Fed cut rates in 2025?
- Will inflation continue to move lower?
- When will the economy fall into recession?
I don’t know the answer to any of these questions.
As Lao Tzu said, “those who have knowledge don’t predict. Those who do predict don’t have knowledge.”
What’s the alternative?
Weigh the evidence as it comes, invest based on probabilities, be forever humble and thankful, and leave the predictions to those whose job it is to entertain. That’s the best you can do in this fickle business of investing – try to find the right path for you and stick with it long enough to reap the enormous benefits of compounding.
In 2025, I predict one thing and one thing only: you will see many more surprises. For that is the nature of markets.
I wish you all a happy, healthy, prosperous and fulfilling 2025.
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