The year 2024 witnessed a remarkable stock market rally, marking the second consecutive year of gains exceeding 20% for the S&P 500. This exceptional performance echoed the exuberance of the late 1990s internet boom, driven by a confluence of favorable economic factors. Cooling inflation, declining interest rates, and the anticipation of lower corporate taxes under a second Trump administration fostered investor confidence and propelled market growth. Unlike the dot-com era, however, the 2024 rally was largely fueled by the transformative potential of artificial intelligence (AI), which captured investor imaginations and reshaped the investment landscape.
The ascendance of AI was prominently reflected in the performance of the top-performing S&P 500 stocks. Palantir and Nvidia, two companies deeply entrenched in the AI ecosystem, experienced triple-digit growth, showcasing the market’s enthusiasm for this burgeoning technology. Palantir’s data analytics and AI platforms, particularly its contributions to the Department of Defense through substantial contracts, propelled its stock price by an astounding 340%, making it the best performing S&P 500 stock of the year. Nvidia, the dominant supplier of GPUs crucial for AI applications and Bitcoin mining, also witnessed remarkable growth, generating $35 billion in revenue in the third quarter alone. This surge in demand solidified Nvidia’s position as the world’s second-largest company by market capitalization, valued at $3.7 trillion by early 2025.
Beyond the direct impact on AI-focused companies, the ripple effects of this technological revolution extended to other sectors, notably the energy sector. The increasing energy demands of data centers, driven by the proliferation of AI, electrification, and decarbonization initiatives, revitalized the utilities sector, which had been the lowest-performing sector in 2023. This surge in demand positioned energy providers like Vistra and GE Vernova for substantial growth. Vistra, newly added to the S&P 500, saw its stock price soar by 261%, benefiting from its natural gas and nuclear power plants, which are well-suited to meet the reliability and scalability needs of data centers. Strategic agreements with cloud computing giants like Amazon and Microsoft further solidified Vistra’s position. GE Vernova, General Electric’s energy spinoff, also experienced significant growth, with its stock rising 150% after going public. The company’s gas turbines, essential for meeting the growing energy demands of data centers, and its involvement in renewable energy projects contributed to its strong performance and upward revision of sales projections.
While AI and energy dominated the narrative, other sectors also experienced significant growth. United Airlines, for instance, capitalized on the resurgence of post-pandemic air travel, with its stock price surging 135% in 2024, its best performance since going public in 2006. The record-breaking passenger volume, coupled with a $1.5 billion share buyback program, fueled investor optimism and propelled United’s stock to new heights. This highlights the diverse factors contributing to the overall market rally, extending beyond the dominant themes of AI and energy.
An interesting anomaly in 2024 was the unprecedented correlation between gold and the S&P 500, reaching a remarkable 0.91. This defied historical trends, where gold has typically exhibited an inverse or low correlation with stocks, serving as a diversifier in investment portfolios. Several factors contributed to this unusual relationship. Coordinated monetary easing by global central banks, lowering interest rates to stimulate economic growth, created a favorable environment for both stocks and gold. Geopolitical tensions and economic uncertainty further boosted demand for safe-haven assets like gold, while simultaneously supporting equity markets through increased government spending in areas like defense, cybersecurity, and infrastructure. Finally, shifts in asset allocation strategies, with investors seeking diversified portfolios that included alternative investments like gold and Bitcoin, likely contributed to the tighter correlation between gold and the S&P 500.
In summary, the 2024 stock market rally was a multifaceted phenomenon driven by a confluence of factors. Cooling inflation, falling interest rates, and the prospect of lower corporate taxes provided a supportive backdrop. The excitement surrounding AI propelled companies like Palantir and Nvidia to unprecedented heights, while the increased energy demands of data centers benefited energy providers like Vistra and GE Vernova. The resurgence of air travel boosted United Airlines, while the unusual correlation between gold and the S&P 500 reflected the complex interplay of monetary policy, geopolitical uncertainties, and evolving investor strategies. This confluence of factors created a robust market environment, resulting in substantial gains for investors and echoing the optimism of previous market booms.
