The S&P 500 is expected to end 2024 with gains of 20% or more, outpacing global markets and marking the second consecutive year of such performance. Despite global economic headwinds, U.S. stocks have continued to thrive, with the benchmark index increasing over 50% in the last 24 months.
The US economy and stock market remain a rare exception globally, with other major economies like China, Germany, and Japan lagging behind in terms of performance. The MSCI All-Country World Ex-U.S. index has increased by around 25%, while China’s Hang Seng stock index has gained only 5% over the past two years.
Several factors contribute to the US outperformance, including a culture of innovation, a history of building world-class technology companies, and a favorable regulatory environment. The “magnificent seven” corporations – Apple, Nvidia, Microsoft, Amazon, Alphabet, Meta, and Tesla – dominate the S&P 500 and have driven portfolio growth.
However, investors should also consider valuation and global market conditions. International equities are currently cheaper than US stocks, with a lower forward price-to-earnings ratio. The outlook for non-US stocks may improve in the future, but it’s unlikely to erode the US advantage, which is driven by the country’s unique blend of innovation, regulation, and growth.
With conviction in this outlook, investors can maintain their portfolio positions without significant adjustments. However, it’s essential to acknowledge the global market landscape and consider potential risks, such as trade wars and regulatory changes.
Source: https://www.startribune.com/us-stock-market-sp-500-index-global-economy/601194963