The final session of 2024 is here and it will mark the end of a remarkably smooth year for Wall Street. The S & P 500 has rallied more than 23% for the year, hitting record highs along the way. The Dow Jones Industrial Average and Nasdaq Composite also soared to record levels, as a cocktail of artificial intelligence enthusiasm, a strong economy, easing monetary policy and expectations of deregulation ahead boosted sentiment. And these gains came with very little turbulence. The S & P 500 did not suffer a correction at any point — which is typically defined as a pullback of 10%. In fact, the benchmark’s biggest pullback of 2024 was an 8.5% slide seen during the summer, well below what is typical. The average peak-to-trough decline for the S & P 500 since 1980 has been 14.2%, according to Carson Group. While the S & P 500 gained 20%-plus in 2023 as well, it wasn’t without a market correction ending in October before a late-year rebound. .SPX YTD mountain S & P 500, YTD The stock market averages about a correction per year, but that doesn’t mean every year has to have one. There are more than one in some turbulent years. And Carson’s Ryan Detrick notes that 21 of the last 44 years have ended without a drop of that magnitude. But this market backdrop could set up investors for some turbulence into the new year. If the Federal Reserve is forced to raise rates — or cut less than what it’s already indicated — it will dent the market’s momentum. Other risks include less progress on deregulation than investors are pricing in or a lack of signficant tax cuts as expected after the re-election of Donald Trump. The S & P 500 will end 2024 with a December decline and currently sits about 3% from its all-time high.
