(Reuters) – U.S. stock index futures moved higher in the final trading session of 2024, continuing the bull run of more than two years ago on signs of post-pandemic economic resilience, hopes of lower borrowing costs and a push for AI.
The S&P 500, Dow Jones and Nasdaq are near record highs and on track to finish higher for the second year in a row.
A nearly 100 basis point interest rate cut in 2024 by the Federal Reserve and a rally in technology stocks in anticipation of a boost to corporate profits from artificial intelligence fueled a surge in stocks in 2024.
The S&P 500’s technology, communications services and consumer staples sectors are up more than 30% this year.
Although Nvidia’s nearly 170% gain this year was smaller than last year, the rally helped the company post $3 trillion in market value, while Tesla regained the $1 trillion mark.
At 5:45 a.m. ET, the Dow E-minis were up 90 points, or 0.21%, the S&P 500 E-minis were up 17 points, or 0.29%, and the Nasdaq 100 E-minis were up 75.25 points , or 0.36%.
Nvidia rose 0.7%, while the Elon Musk-led automaker added 1.6% in premarket trading. The moves are expected to be affected by lean volumes ahead of the New Year holiday on Wednesday.
“It’s also natural to think that the AI rally will one day fizzle out… yet all those who have called for a correction have been wrong so far, and Wall Street analysts have been raising their price targets all year long ,” he says. said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
By the end of the year, risk-taking improved as Donald Trump’s presidential victory raised expectations that he would follow through on his promises to ease regulations, cut taxes and raise tariffs to help domestic companies.
His win also boosted small-cap stocks. The Russell 2000 hit an all-time high, rising about 10% for its second straight annual gain. The banks have also benefited from this and have risen by more than 30% this year.
However, stock prices hit a rough patch in December, putting the S&P 500 on track for its biggest monthly decline since April, due to higher Treasury yields at a time when stock valuations are under pressure and the Fed is cautious.
The yield on the 10-year benchmark has hit a seven-month high of 4.5% as markets view Trump’s plans as inflationary, potentially slowing the pace of Fed rate cuts.
Traders expect the central bank to make its first interest rate cut of 2025 in March or May, according to the CME Group’s FedWatch Tool.
Trump’s victory has also proven to be a boost for crypto stocks, as bitcoin prices topped $100,000.