What to make of 2024 in financial markets and lessons to take in 2025

In 2024, financial markets have been moved by a mix of monetary policy shifts, geopolitical tensions, and evolving sectoral trends. Bigdata.com highlights five key moments that shaped the year, including the Federal Reserve's rate cuts and the impact of the incoming Trump administration on the economic landscape. We also outline five key lessons to carry forward into 2025.

5 events that moved the markets in 2024

1. The Fed’s rate cuts and revised outlook for 2025

The Federal Reserve concluded 2024 with a 25 basis point (bps) rate cut in December, lowering the federal funds rate to 4.25%-4.5%. This marked the third consecutive cut, following reductions of 50 bps in September and 25 bps in November. However, the Fed signaled a more cautious approach for 2025, trimming its projected rate cuts from four to two, reflecting ongoing concerns over persistent inflation, strong economic growth, and uncertainty around President-elect Trump’s policies.

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2. The 2024 U.S. Presidential Election

Donald Trump’s return to the presidency had an immediate impact on financial markets. Deregulation promises boosted sectors like financials and energy, while concerns about trade tensions and tariffs raised fears of global economic disruption - particularly in relation to China. These uncertainties contributed to market volatility and shaped investor sentiment throughout the year.

Go deeper: Peter Hafez, our Chief Data Scientist, leveraged the Bigdata.com API to identify which companies could thrive or struggle during a second Trump administration. Read the analysis here.

3. Strong corporate earnings

Corporate earnings played a crucial role in shaping equity market performance in 2024, but questions about their sustainability started to emerge. U.S. corporate earnings grew by around 10%, driven largely by the technology and AI sectors, which supported gains in equity markets. Analysts forecasted continued earnings growth of 13-14% for 2025, fueling optimism. However, concerns remained that these projections might be overly optimistic due to moderating economic growth and a slowing labor market.

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4. Russia-Ukraine conflict and global disruptions

The ongoing conflict in Russia and Ukraine contributed to geopolitical instability, disrupting supply chains, increasing energy costs, and amplifying cybersecurity risks. These disruptions negatively impacted corporate earnings across various sectors and contributed to increased volatility in global financial markets.

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5. Technology and AI sectors led the market

The technology and AI sectors outperformed significantly in 2024, driven by investor enthusiasm for innovation and strong earnings growth. These sectors became key areas of resilience, helping support broader market gains amid wider uncertainties.

Did you know? you can chat with Venture Hub, a structured dataset offering actionable insights into investor activity, sector performance, and emerging trends. For instance, companies in Science and Engineering have been raising significant capital in 2024 - take a closer look at how Venture Hub tracks these dynamic shifts in this use case.

5 Key Takeaways for 2025

Despite a turbulent year, the financial markets demonstrated resilience, adaptation, and the importance of strategic foresight. Here are five key lessons that emerged over the course of the year:

1. The Expensive can always get more expensive

Despite concerns about elevated valuations, the S&P 500 continued to grow more expensive. The "Magnificent Seven" tech stocks led this trend, showing that even in an environment of high valuations, market leaders can attract capital in pursuit of growth-driven narratives. This highlights the importance of understanding momentum and investor psychology in modern markets.

2. America remains central to global markets

In 2024, the U.S. stock market, particularly the NASDAQ, continued to outperform global counterparts. Technology and AI-driven equities remained a focus, reinforcing the U.S. market’s central role for global investors. For many portfolios, the adage "as America goes, so goes the world" still holds true.

3. Markets favor growth paired with disinflation

The macroeconomic environment of slowing inflation and steady global growth proved favorable for equity markets. This combination helped support gains across regions and sectors, demonstrating that investor sentiment tends to thrive in periods of economic stability and predictability.

4. Divergent monetary policy drives currency volatility

The varying pace of interest rate cuts among central banks led to notable differences in monetary policy expectations. These divergences resulted in sharp currency fluctuations, emphasizing the significant role of central bank actions and the importance of monitoring policy moves and their relative timing.

5. Fiscal stimulus helps maintain market resilience

A record number of interest rate cuts in 2024, coupled with fiscal measures from key economies like the U.S., UK, Japan, and China, helped sustain economic growth. The interplay between monetary easing and fiscal stimulus revealed how coordinated policies can support market performance, even in uncertain environments.

The events of 2024 underscore the importance of understanding macroeconomic trends, market dynamics, and the interplay between fiscal and monetary policies. As we look to 2025, navigating an environment marked by both uncertainty and opportunity will require informed, data-driven strategies.

At Bigdata.com, we’re committed to providing the clarity and insights investors need to make informed decisions. We rely on accurate financial data and real-time analysis to help you stay ahead in a constantly shifting market. If you haven’t tried Bigdata.com yet, you can get started for free.