US stock index futures edged higher on the last trading day of 2024, capping off a remarkable year that saw equities rally to record highs, fueled by a confluence of factors including post-pandemic economic resilience, anticipation of lower borrowing costs, and the powerful surge of artificial intelligence (AI).

The S&P 500, Dow, and Nasdaq are all nearing record highs, setting the stage for a second consecutive year of substantial gains.

The catalysts: AI, rate cuts, and a Trump victory

A combination of a nearly 100-basis point interest rate cut by the Federal Reserve and a powerful rally in technology stocks, driven by the perceived potential of AI, propelled the market forward throughout 2024.

The S&P 500 tech, communications services, and consumer discretionary sectors have all surged by more than 30% this year, while AI poster-child Nvidia’s nearly 170% surge, while smaller compared to last year, helped it breach $3 trillion in market value.

At the same time, Tesla reclaimed its $1 trillion valuation.

Market momentum heading into the new year

As of 5:45 a.m. ET, Dow E-minis were up 90 points, or 0.21%, S&P 500 E-minis were up 17 points, or 0.29%, and Nasdaq 100 E-minis were up 75.25 points, or 0.36%. Nvidia was up 0.7%, while Tesla added 1.6% in premarket trading.

While trading volume is expected to be light due to the upcoming New Year’s holiday, the underlying momentum of the market remains strong. “It’s also normal to start thinking that the AI rally will one day fizzle out…but still, all those who called for a correction have so far happened to be wrong, and Wall Street analysts spent the year rising their price targets,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told Reuters.

A Trump tailwind for risk-taking

Toward the end of 2024, risk-taking increased following Donald Trump’s presidential win, fueled by hopes that his policies of easing regulations, cutting taxes, and raising tariffs would benefit domestic businesses.

Small-cap stocks also saw a lift from the victory, with the Russell 2000 reaching a record high and setting up for a 10% annual gain, its second in a row.

Banks have also reaped the benefits, with a surge of more than 30% this year.

December volatility and the Fed’s stance

Despite the overall positive trends, the market experienced some turbulence in December, with rising yields on Treasury notes and stretched equity valuations triggering a decline.

The S&P 500 is currently on track for its biggest monthly decline since April, reflecting investor concerns about the Fed’s cautious stance.

The yield on the benchmark 10-year Treasury note has retreated from its seven-month high but remains at 4.5%.

Markets perceive Trump’s policies as inflationary, which could slow the pace of the Fed’s rate cuts.

Traders now expect the Fed’s first rate cut of 2025 to occur in either March or May, according to the CME Group’s FedWatch Tool.

Crypto’s bullish response

Trump’s win has also been a boon for the crypto sector, with bitcoin prices touching $100,000.

MicroStrategy shares have more than tripled in value this year due to its bitcoin acquisitions, while Coinbase and MARA Holdings have also seen gains.

While many sectors have seen substantial growth, the materials sector experienced a decline of over 2%, primarily due to economic challenges in China, a major metals consumer.

This divergence underscores the varied impact of global economic conditions on different sectors.

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Inflation dominated financial searches in 2024, reflecting widespread economic concerns, while tariffs, stock splits, and cryptocurrencies also captured significant public interest.

A recent report from Investopedia revealed its “Terms of the Year,” highlighting the top ten money topics that drew readers’ attention on the finance-focused platform throughout the year.

Inflation, taking the top spot, underscored a year where rising prices and slower economic growth were central to public discourse.

“It was top of mind for everyone and even influenced the presidential election,” said Caleb Silver, Investopedia’s editor-in-chief, during an appearance on The Claman Countdown.

Despite cooling inflation rates, consumers felt the pinch as goods remained expensive, further fueling searches on the topic.

Tariffs, ranking second, gained momentum as trade policies became a hot election issue.

Discussions surrounding tariffs surged following Donald Trump’s re-election, with many linking the topic to potential price hikes and economic shifts under his administration.

Nvidia and stock splits garner market attention

Nvidia, whose shares skyrocketed over 185% in 2024, secured the third position on the list.

The chipmaker’s strong financial performance and a widely-anticipated stock split over the summer contributed to the buzz, with “stock split” earning fourth place in searches.

Nvidia’s leadership in artificial intelligence and semiconductors kept investors glued to its movements.

Debt, savings, and crypto maintain relevance

The US national debt crossing $36 trillion pushed “national debt” to the fifth spot, reflecting growing concern over fiscal policy and economic stability.

Other popular topics included “homeowners insurance,” “student loan forgiveness,” and “high-yield savings accounts,” which ranked sixth, seventh, and eighth, respectively, as Americans sought practical financial advice.

Bitcoin, coming in ninth, demonstrated a resurgence of interest as cryptocurrency markets recovered in the latter half of the year.

Silver noted that many new investors entered the crypto market post-election, drawn by a “less regulatory environment” and rising optimism in digital assets.

Sports betting and financial trends converge

Rounding out the top 10 was “moneyline bet,” reflecting the growing overlap between sports betting, financial markets, and political odds-making.

The term gained traction as betting markets proved more accurate than polls during the presidential election, capturing public fascination.

Looking ahead, Silver predicted that tariffs, trade policies, and the Trump administration’s economic agenda will continue to dominate financial discussions.

Additionally, with increased interest in cryptocurrencies and capital markets, 2025 is poised to be a year of dynamic shifts in investor behavior.

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In 2024, US credit card defaults surged by 50% compared to the previous year, reaching levels not seen since 2010, according to data from BankRegData analyzed by the Financial Times.

This alarming trend has raised fresh concerns about the financial health of American households.

The dramatic increase comes amid soaring consumer debt, which hit a record $1.17 trillion in the third quarter of 2024, as reported by the New York Federal Reserve.

Total household debt also reached an unprecedented $17.94 trillion, fueled by rising balances in mortgages, auto loans, and student loans.

‘The credit card debt bubble is popping’

Although banks have yet to release their fourth-quarter earnings, early indicators suggest a troubling rise in consumer defaults.

Capital One recently reported that its annualized credit card write-off rate—representing the portion of loans deemed unrecoverable—climbed to 6.1%, up from 5.2% the previous year.

“Consumer spending power has significantly weakened,” said Odysseas Papadimitriou, CEO of WalletHub, in an interview with the Financial Times.

Recent research from PYMNTS Intelligence highlights that 74.5% of consumers now carry some form of credit card debt.

While this figure remains consistent across income brackets, it spikes dramatically to over 90% among those living paycheck to paycheck and struggling to meet their financial obligations.

The study also found that paycheck-to-paycheck consumers with difficulty paying bills carry an average outstanding balance of $7,038, compared to $5,766 for those who are paycheck-to-paycheck but manage to cover their expenses.

For financially stable cardholders, the average balance drops significantly to $3,202.

Additionally, nearly 40% of struggling consumers reported regularly maxing out their credit limits, underlining the increasing strain on household finances.

Mark Zandi, chief economist at Moody’s Analytics, highlights a growing economic divide:

“High-income households are fine, but the bottom third of US consumers are tapped out. Their savings rate right now is zero.”

This disparity has left many Americans, particularly younger borrowers, struggling to keep up with payments.

Auto loans and credit card delinquencies have risen at a “notably elevated” rate, according to the New York Fed, reflecting the ongoing financial pressures.

A key driver behind these delinquencies is the combination of inflation and higher interest rates, which have pushed up monthly payments on credit cards and auto loans.

Many consumers are now finding themselves unable to manage these increased financial obligations.

“The credit card debt bubble is popping,” warned The Kobeissi Letter on X, signaling the broader implications for the economy.

Wealthier households remain relatively insulated

While experts agree that the credit card debt crisis is a significant concern, the impact is not evenly distributed.

Wealthier households remain relatively insulated, while lower-income groups bear the brunt of the financial strain.

Policymakers and financial institutions will need to address this growing disparity as Americans head into 2025 with mounting debt burdens.

Whether through regulatory reforms or targeted relief measures, the focus must shift toward ensuring financial stability for vulnerable households.

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Chipmaker Nvidia was all the rage in 2024, as the little known company went on to become one of the most valuable companies in the world, often taking the top spot.

Nvidia’s share price soared more than 185% YTD , and was seen hovering around $137 on Tuesday.

However, despite the stellar show, Nvidia is only third in the S&P 500’s list of top performing stocks of 2024.

Palantir Technologies that specialises in software platforms for big data analytics, has seen a whopping 365% rise YTD, followed by Vistra Corp, that has risen by more than 267% this year.

Here’s what analysts have to say about each of these stocks heading into 2025:

Palantir:

Palantir has gained from the hype around generative artificial intelligence as it was one of the early adopters of what we now know as AI.

The company specializes in data analytics, processing vast amounts of information to uncover actionable insights and trends.

This technology served as a foundation for the development of large language models (LLMs) that power platforms like ChatGPT.

Among analysts polled by FactSet, Wedbush’s Dan Ives has consistently expressed confidence in the company’s ability to capitalise on the AI boom.

He recently raised his target price to $75. The price of Palantir stood at $77.18 on Tuesday.

Ives sees the company as well-positioned to replicate the success of software and cloud-computing giant Oracle in the AI era.

On the the other hand, RBC Capital Markets’ Rishi Jaluria has a starkly lower target price of $11 for Palantir.

His valuation is based on an enterprise value-to-revenue multiple of seven times his forecast for the company’s 2025 revenue, a sharp contrast to its current multiple of 33 times.

Jaluria views Palantir’s risk-reward profile as “skewing unfavorable.”

In his latest research note, he pointed out that the company’s recent earnings strength was heavily driven by government contracts, influenced by the timing of specific deals, while growth in its commercial segment has slowed.

Vistra Corp.

Vistra Corp, the integrated  retail electricity and power generation company based in Irving, Texas.

Vistra has capitalized on the surging electricity demand driven by AI data centers and cryptocurrency mining—an industry now consuming more energy than some entire nations.

This demand is expected to persist and intensify with the ongoing transition to electric vehicles (EVs).

While EV demand has proven less predictable than anticipated, the overall outlook for energy demand remains exceptionally strong, driving investors to the stock.

Shares of the Texas based company have more than tripled in the trailing 12 months but is still cheaper than Constellation Energy at writing.

Shahriar Pourreza is convinced that the company’s nuclear as well as gas assets are attractive to AI companies.

I like Vistra because I don’t have to bet whether the next deal is going to be a nuclear plant or it’s going to be a gas plant.

He went on to call Vistra stock his top pick for 2025 in his report.

Pourreza’s $177 price target indicates potential for another 26% upside in VST from current levels.

On the other hand Max Greve of Seeking Alpha believes over time, more consumers will move away form grid energy towards standalone-solar-storage.

“I recognize that is a controversial view which many have taken exception to. But I still think we are more likely to see a grid-demand shift – higher from business, lower from consumers – than a massive grid-demand expansion,” he writes.

This is why, he says, he has avoided not only Vistra but pretty much all electric grid stocks such as ConEd, Dominion, and NRG Energy.

Obviously, that hasn’t served me well this year in the case of Vistra. And between the AI demand the potential EV expansions I certainly don’t recommend a short. But I am staying away from Vistra, despite its admitted short-term potential.

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The demand for mutual funds in India has seen substantial growth over the past decade, driven by increasing financial awareness, greater access to investment options, and a rising middle class, and 2024 witnessed MFs getting a significant boost from retail investors.

Systematic Investment Plans (SIP) inflows registered a steep jump with investor count going up by nearly 10 million in the first 11 months of the year.

This led to a surge of investments in active equity schemes with Rs 3.5 trillion being poured into these schemes, more than double of what was invested in 2023.

As 2024 draws to a close, ETMutualFunds of Economic Times analyzed the top 10 equity mutual funds of the year and evaluated their performance over the last three calendar years.

The data revealed interesting insights, with the top four funds hailing from Motilal Oswal Mutual Fund.

Motilal Oswal Midcap Fund: Leading the Pack

The Motilal Oswal Midcap Fund emerged as the top-performing equity mutual fund in 2024, delivering an impressive 57.47% return.

Notably, this fund has maintained positive performance over the last three years, with returns of 55.83% in 2021, 10.71% in 2022, and 41.68% in 2023.

Other Motilal Oswal Mutual Funds in the Top 10

Motilal Oswal ELSS Tax Saver Fund: This fund secured a 46.55% return in 2024, continuing its streak of positive returns over the past three years.

Motilal Oswal Flexi Cap Fund: Posting a 46.23% return in 2024, this scheme recorded positive returns in 2021 and 2023 but faced a slight loss of 3% in 2022.

Motilal Oswal Large & Midcap Fund: With a 45.18% return in 2024, this fund has avoided negative returns over the last three years, delivering 40.82% in 2021, 1.66% in 2022, and 38.05% in 2023.

Source: The Economic Times

Top Performers from Invesco Mutual Fund

Invesco India Midcap Fund: Delivered 43.22% in 2024, with consistent positive returns over the last three years.

Invesco India Focused Fund: This fund recorded a 43.21% return in 2024 and had positive returns in 2021 and 2023.

However, it saw a decline of 8.61% in 2022.

Other Notable Funds in the List

Bandhan Small Cap Fund: The fund returned 42.31% in 2024, with exceptional performances in 2021 and 2023 (over 50%) but a 6.13% loss in 2022.

HSBC Midcap Fund: Offered a 39.33% return in 2024, maintaining a positive performance streak for the last three years.

Edelweiss Mid Cap Fund: Recorded a 38.78% return in 2024 with consistent positive returns over the past three years.

LIC MF Small Cap Fund: Delivered 38.59% in 2024, also achieving positive results for the past three years.

Excluded Fund: Motilal Oswal Small Cap Fund

The Motilal Oswal Small Cap Fund, launched in December 2023, was excluded from the analysis.

This fund, however, delivered an impressive 45.77% return in 2024.

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