Here is how 2024 panned out for investors: The US barometer S&P 500 Index is up a whopping 29% for the year so far, inclusive of dividends, or more than quadruple the original consensus for the year. Moreover, the US elections were a tame affair, with former President Donald Trump decisively defeating his rival, incumbent Vice President Kamala Harris, with a plurality of total votes. His Republican party also won control of both the Senate and the House of Representatives.
This time last year, I wrote a column about how I saw the US stock market performing in 2024 after its spectacular 26.3% total return in 2023.
Given the strong earnings growth, robust capital expenditure around AI and anticipated interest rate cuts in 2024, I concurred with the consensus view at the start of the year that the US market could deliver over 7% return for the outgoing year or about 9% total return. Not surprisingly, I got some pushback. “US market is in a bubble that would burst soon” was a key theme in the missives I got. Others conceded that while US corporate earnings might grow strongly, the presidential election would weigh on the market as neither of the two main political parties would accept the results. Pessimists were forecasting a 10 to 15% down year for the US market in 2024 because the market had pulled forward sales and profits in 2023 due to AI hype.
