S&P 500 rises 26 percent in 2024, to achieve annual return exceeding 20 percent

(MENAFN) The S&P 500 has risen by 26 percent so far this year, positioning it to achieve an annual return exceeding 20 percent for the second consecutive year. This marks a rare occurrence, as the index hasn’t posted back-to-back gains of this magnitude since the dot-com era of 1997-1998. The rally has been driven by several key factors, including a resilient job market, declining inflation, robust corporate earnings growth, and growing enthusiasm surrounding artificial intelligence technologies.

As investors look ahead to 2025, attention is shifting toward how the markets might perform under the leadership of President-elect Donald Trump, who will return to the White House for a second term. During his first term, the S&P 500 surged by 70 percent, translating to an impressive annual growth rate of 14.1 percent, well above the historical average of 7 percent. While presidents do not directly dictate market performance, their policies can significantly influence the broader economy and investor sentiment.

A key example is Trump’s signing of the 2017 tax reform, which introduced significant tax cuts for individuals and reduced the corporate tax rate to its lowest level since 1939. These tax changes provided a boost to disposable income for consumers while increasing corporate profit margins. This combination supported higher consumer spending and bolstered economic growth during Trump’s first term.

Between 2017 and 2019, U.S. GDP expanded at an annualized rate of 2.7 percent, a notable improvement over the 1.5 percent average growth rate of the previous decade. These economic gains were partially attributed to the favorable fiscal policies implemented during Trump’s presidency, which helped sustain the momentum in corporate investment and consumer confidence. As 2025 approaches, market participants are eager to see how similar policies might shape economic and market trends in the coming years.

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