Ottawa, January 8 - 2024 was a stellar market year, with substantial gains across significant indices. The S&P 500 rose nearly 30%, while the NASDAQ posted an impressive 34% increase.

Technology Leads the Way

The technology sector experienced the most growth and was the driving force behind this year’s bullish market, with tech companies such as Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA) experiencing substantial growth driven by advancements in artificial intelligence.

Small-Cap Stocks Make a Comeback

In 2024 small-cap stocks also made a lot of noise, with the Russell 2000 reaching all-time highs in three years. Small-cap stocks have relatively small market capitalizations, typically ranging from $300 million to $2 billion. The growth in small-cap stocks can be explained by the rise in consumer spending and stable interest rates throughout the year. This suggests investors are beginning to see value and opportunity in smaller companies after several years of underperformance.

Political Landscape

In 2024 the political landscape was marked by significant events such as the US presidential election and geopolitical tensions and relations. President Donald Trump's re-election introduced both optimism and uncertainty into the markets. Furthermore, ongoing conflicts, particularly in the Middle East and Ukraine, raised concerns about potential disruptions to trade and oil supplies. Lastly, the relations between countries, such as U.S.-China Relations, also had an impact on the markets.

What’s to Come in 2025

As we look ahead to 2025, several key factors are expected to shape the market:

Federal Reserve: In 2025 the Federal Reserve is anticipated to announce a 0.25% interest rate cut, and predictions indicate a pause in further interest rate cuts. A single 0.25% rate cut might offer short-term optimism; however, the Fed's pause could dampen expectations for significant gains in 2025. Interest rates have a big impact on the market as when interest rates rise, borrowing becomes more expensive, which reduces disposable income leaving people with less money to invest. For businesses, higher interest rates lead to higher costs reducing profitability and gains.

Political landscape: We are heading into 2025 with a newly elected president in the United States; the incoming administration's policies, including potential tax cuts, deregulation, and trade adjustments, will have a significant impact on the market. These administration’s policies will play a pivotal role in shaping market dynamics

Technological Advancements: In 2024, the technology sector dominated the markets. The ongoing AI boom is expected to continue driving growth in the technology sector. Analysts predict that companies leading in AI development will maintain their upward trajectory, contributing to overall market gains.

2024 was undeniably a remarkable year for the markets, marked by significant gains in large-cap and small-cap stocks underpinned by technological innovation. As we step into 2025 we can’t assume the bullish trend from 2024 will continue. Investors will closely monitor central bank policies, the political environment, and technological advancements to navigate opportunities and risks in the evolving landscape.