The S&P 500 had a blast last year, finishing north of a 23% gain, which is not bad, especially given the context of historical returns.
source: carbonfinance
The other major indices also roared. The Nasdaq soared 29%, while the Dow Jones gained a modest 13%, marking a strong year for U.S. equity markets.
Surging AI stocks, a resilient economy, the “Trump 2.0” post-election rally, and rate cuts drove the rally.
source: carbonfinance
The AI powerhouse was a key driver of the S&P 500’s stellar year, contributing 22% of the index’s performance.
Other Magnificent 7 members—Apple, Amazon, and Meta—collectively added another 19% to the total gains.
While Nvidia and Tesla have dominated the internet buzz—and rightfully so—the true standout of last year might come as a surprise. Palantir (PLTR) emerged as the big winner, boasting a remarkable gain of over 300%.
source: real investment advice
As is often the case, investors tend to chase last year’s best performers only to find out that what worked last year may have a quite different outcome this year.
2025 Outlook
No one has a crystal ball.
Wall Street targets range from 6,400 to 7,007.
This implies returns between +8% and +18% from Wednesday’s close.
Analysts project the S&P 500’s earnings to climb to $249 per share by the end of 2024, up from $208 per share—a robust 19% growth. Profit margins are expected to improve, driven by strategic workforce adjustments, shifts in work-from-home policies, and technological advancements.
Lower inflation is expected to ease cost pressures, though this could shift depending on changes in trade policy.
However, a significant event reducing earnings expectations could disrupt this outlook. As history shows, there is a strong correlation between corporate earnings and equity market performance.
source: real investment advice
Overall, the fundamentals driving earnings growth remain solid. While valuations are above historical averages, they aren’t a significant cause for concern. As always, uncertainty persists, but the outlook for stocks appears favourable.
Investors can long the S&P 500 using our 5x S&P 500.
Alternatively, investors can short the S&P 500 using our -5x S&P 500.
Investors can long Palantir using our 3x Palantir.
Alternatively, investors can short Palantir using our -1x Palantir.
