Artificial intelligence (AI) has been the driving force behind the blistering first half of the US stock market in 2024. The S&P 500 Index has soared 14% since January, marking one of its best starts to a year this century. The impressive rally can be attributed to a combination of factors including a robust economy, strong corporate earnings, and the high demand for companies involved in AI technology.
What's interesting is that a strong first half for the stock market historically sets the stage for a positive second half. With 31 all-time closing highs in the first six months of the year, the S&P 500 is on a remarkable trajectory. The market's current bull run has added over $16 trillion in value since October 2022, nearing the 5,500 mark.
Tech giants like Nvidia, Microsoft, and Meta Platforms have been major contributors to the market rally, with information technology and communication services sectors leading the gains. While utility stocks have also seen a rise due to their involvement in providing energy to data centers related to AI.
However, not all sectors have fared well in 2024. Real estate has suffered losses, posting its worst first half relative to the broad index. Despite the market's overall success, some strategists are cautious, noting the overvaluation of tech stocks and the concentration of gains in a few high-flying companies.
Looking ahead, experts suggest that companies outside of tech may drive the next leg of the market higher. Historically, a strong first half often leads to a positive second half for the stock market, setting the stage for further gains. While uncertainties such as the US presidential election and interest rate cuts may impact market performance, the outlook remains optimistic for the rest of the year.
In conclusion, the AI-fueled rally in the US stock market has been a remarkable journey in 2024. With the market hitting new highs and a positive outlook for the future, investors can expect more excitement and opportunity in the months to come.