[U.S. Stock Investor New Year Message}

#Happy New Year [2025] — For the vast community of U.S. stock investors, if 2023 was a year full of surprises and unexpected turns (keyword: Surprise), then 2024 was a year marked by renewed growth and continuous breakthroughs (keyword: Breakthrough).

1) Record-Setting Rally

All four major U.S. stock indices posted significant gains for a second straight year, each setting new all-time highs.

• The S&P 500 broke its record 57 times in 2024, surpassing the 6100 level for the first time.

• The Nasdaq 100 reached an annual high of 22,133 points, the Dow Jones Industrial Average peaked at 45,073, and the Russell 2000 small-cap index briefly surpassed its 2021 high of 2,458, reaching 2,466.

2) Technical Breakout

Following a major rally in 2021, panic selloff in 2022, and oversold rebound in 2023, the market entered 2024 under a cloud of skepticism. Yet the three major indices successfully broke out of a three-year consolidation range, unlocking fresh upside potential.

Remarkably, this breakout was technically precise, with the S&P 500 rising by exactly 1,300 points, the height of its prior three-year range.

3) Double-Digit Gains Across the Board

All four major indices posted a second consecutive year of gains:

• Nasdaq 100: +53.8% in 2023, +25% in 2024

• Dow Jones: +13.7% in 2023, +12.9% in 2024

• S&P 500: +24.2% in 2023, +23.3% in 2024, closing at 5,881

• Russell 2000: +15% in 2023, +10% in 2024

4) Breakthroughs Beyond Charts

This year’s breakthroughs weren’t limited to charts—they extended to macro and fundamental levels:

• The Federal Reserve cut interest rates for the first time in four years, officially shifting into an easing cycle, boosting stock prices.

• Japan’s central bank hiked rates for the first time in decades, ending its negative-rate era, but also triggering volatility in global equity and currency markets—a global “Black Monday.”

• Frontier technologies like AI, quantum computing (QC), and humanoid robotics (HR) made major leaps and became standout themes in equity markets.

• And last but not least, Trump’s surprise re-election shocked the political and financial world.

5) Volatility & Challenges Behind the Rally

While indexes posted strong gains, assuming this was an “easy money” year would be a big mistake:

• Volatility increased sharply, market breadth was thin, and performance was extremely concentrated in a few names.

• Most pullbacks were violent and swift, with sharp V-shaped reversals, making stock picking and timing particularly hard for retail investors.

Notable corrections:

• Despite low average volatility, the S&P 500 saw a near -10% correction, including a sharp selloff on Black Monday (Aug 5).

• Nasdaq 100 dropped -15.7% from peak to trough.

• Russell 2000 corrected over -10% twice.

• Even the usually stable Dow Jones traded sideways for nearly half the year and ended with 10 consecutive down days in December—a rare pattern.

6) Sector & Breadth Breakdown

• All 11 S&P sectors ended in the green, but only Communication Services, Financials, Consumer Discretionary, and Utilities outperformed the index.

• Materials, Healthcare, Real Estate, and Energy significantly underperformed.

• Around 35% of S&P 500 companies ended the year in the red, and only ~30% beat the index.

• 40% of Nasdaq 100 stocks declined, with 75% underperforming the index.

• Even in the Dow, 8 of the 30 stocks closed lower.

The market showed a clear “30/70” distribution, where a small number of heavyweights drove overall gains.

7) Top Performers of the Year

• Best performer in the S&P 500: PLTR (AI software), up +340%.

• Among the top 20, 30% came from Utilities and Energy, making them the best-performing sectors by concentration.

• Among the top 50 largest caps:

• NVDA (chips): +170%

• AVGO: +110%

• NFLX, TSLA, META, and value leaders ORCL, WMT, GE, AXP all significantly outperformed.

• However, TSLA and AVGO saw most of their gains in the final two months post-election.

• NVDA largely moved sideways after July.

• Big decliners included ADBE, AMD (Tech), PEP (Consumer), and healthcare giants MRK, JNJ, UNH.

Reflection & Outlook

Looking back, the full-year path of the U.S. stock market in 2024 aligned closely with our January outlook:

“2024 will likely be a year of hope and renewed growth. Breakthroughs will define the theme. The path will be volatile, but the outcome can be stable and constructive.”

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Looking Ahead to [2025]

A) Although the Fed has begun its rate-cut cycle, interest rates will likely stay elevated for longer, and sticky inflation remains a concern. Macro policy conditions will closely resemble 2024, but the Fed’s influence may diminish somewhat.

B) Instead, the market will be primarily driven by the Trump administration’s fiscal and trade policies, such as:

• Corporate tax cuts

• Reduced government spending

• Looser regulations

• Aggressive tariffs on trade partners

C) In 2024, S&P 500 companies posted a 9.4% earnings rebound, but this was concentrated:

• The Top 7 Tech giants grew profits by 33.3%,

• The other 493 companies only managed 4.2%.

In 2025, market breadth is expected to improve.

• Value stocks may offer oversold rebound opportunities.

• The top 7 tech firms will likely slow to 21.3% earnings growth, while the rest could see 13%+.

• Overall S&P earnings growth may accelerate to 14.8%.

D) Risks for 2025:

• High valuations (price is outpacing earnings growth)

• New government policy unpredictability and increased partisan conflict

• Geopolitical uncertainties, especially U.S.-China relations, Russia-Ukraine, Middle East, Korean Peninsula, Taiwan Strait, and South China Sea

• Shifts in monetary policy by major central banks like the BoJ

• And of course, the impact of natural disasters should not be underestimated

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Overall Outlook:

My personal bias for 2025:

The main theme will be volatility.

• Indices are expected to rise further, but not as strongly as in the past two years.

• Expect increased volatility, with multiple correction-entry opportunities throughout the year.

• Emerging markets will face rising pressure in both equities and currencies.

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Sector & Investment Opportunities for 2025:

• Enterprise AI applications and humanoid robotics will emerge as long-term investment themes

• Value stocks (especially in healthcare and high-end manufacturing) offer valuation-recovery opportunities

• Financial leaders remain solid anchors in long-term portfolios

• Streaming, digital payments, and quantum computing may become short-term speculation hotspots

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Last but not least, we wish all our subscribers a successful and steady investing journey in the new year.

Happy New Year!

— The Currency Store Analysis Team