Looking back on 2024, it clearly echoed many of the themes from 2023. There were some brief economic growth scares along the way, but the broader economy continued to defy expectations and surprised once again to the upside. Stocks continued their strong performance, putting the S&P 500 on track to record its second consecutive year of 20% plus returns. Powerful trends in artificial intelligence and technology have continued unabated and largely overshadowed other factors like election uncertainty, continued geopolitical tension, and some rich stock valuation levels. After the election, the anticipation of potentially market-friendly policies from the incoming administration also helped to bolster stocks.

The bond market, in contrast, experienced another lackluster year. While the Federal Reserve (Fed) initiated a long-awaited easing cycle, policy ambiguity and uneasiness over rising debt levels led to increased volatility in bonds, but no clear directional trend.

As we look ahead to 2025, we remain cautiously optimistic. Cautious because we know that no market environment is ever permanent, and that change is always potentially around the corner. Optimistic because we recognize constructive long-term technology trends are in place. Plus, potential tax policy and deregulation efforts in 2025 could provide some semblance of a tailwind — particularly from an economic perspective. While risky asset returns are not expected to be as robust as 2024, 2025’s investment environment should prove to be favorable for investors.

View the complete guide 2025 Outlook: Pragmatic Optimism, featuring forecasts for stocks, bonds, and the economy, as your guide for the second half of 2024.