MARY LOUISE KELLY, HOST:
Today marked the end of a pretty great year for the financial markets. All the major U.S. stock indices soared this year. The S&P 500, which includes the major tech stocks, ended trading today up more than 23% for the year. But investors also faced a lot of uncertainty in 2024, and they are bracing for more, as NPR financial correspondent Maria Aspan is here to explain. Hi, Maria.
MARIA ASPAN, BYLINE: Hey, Mary Louise.
KELLY: Hey. So start with the good stuff. What made investors so happy this year?
ASPAN: So it was a sometimes bumpy year, but ultimately, investors have a lot to celebrate. The stock market tells us about what's going on day to day in the world of business and the wider economy. And the economy has been pretty healthy this year. Inflation is down. Unemployment is still low. And the Federal Reserve has finally started cutting interest rates. Meanwhile, in the world of business, one big winner this year was artificial intelligence.
You mentioned tech stocks, and we really saw them soar this year on the promise of the AI boom. Microsoft, Google, Facebook - they're all spending billions of dollars investing in AI. That was really good for companies like NVIDIA, which sells the chips these tech giants need to make AI happen. NVIDIA is now one of the most valuable companies in the world. But we did see a lot of volatility in tech stocks this year because, at some point, these companies are going to have to stop spending money and make all their AI investments actually pay off.
KELLY: OK, so that's the read on tech stocks. What other big business trends are you watching for going into next year?
ASPAN: Cryptocurrency. Investors had a great year, and they're about to get a much friendlier government in Washington. The price of Bitcoin hit record highs this fall after President-elect Trump won the election and started naming crypto-friendly advisers to his next cabinet. I'm also going to watch what's happening in the health care industry. As you know, it's been less than a month since UnitedHealthcare CEO Brian Thompson was shot and killed in New York City, and since then, we've seen a lot of scrutiny on the business of health care. Consumers are angry about denied claims and the high price of care in the United States. Now lawmakers from both parties are calling for more regulations, and shares of all the big health insurance companies ended down in 2024.
KELLY: Go back, Maria, to something you mentioned a moment ago - that the Fed did finally start cutting interest rates in September. From an investor's point of view, how important is that?
ASPAN: Well, it was a huge turning point for the economy, and the markets rejoiced. The Fed cut interest rates three times this fall. That signaled that it feels good about inflation going in the right direction. And lower rates make it cheaper for all of us to borrow money, consumers and companies alike. But now the Fed is signaling that it might slow down on rate cuts next year.
KELLY: Well, and it's so interesting because, as we just saw in the November election, a lot of Americans are not feeling great about the economy. That was a big reason that President-elect Trump claims that he got reelected. So what should we be watching for as he moves back into the White House next year?
ASPAN: Well, Trump has promised to cut taxes and regulations again, and that should make it easier for companies to make money. But investors are also worried about what Trump's policies might do to the economy long-term. They're specifically worried about his promised tariffs and mass deportations. If Trump follows through on those, businesses may raise prices, and we could see inflation start up all over again. That's something that could hurt both consumers and investors next year and beyond.
KELLY: NPR financial correspondent Maria Aspan. Thank you.
ASPAN: Thank you. Transcript provided by NPR, Copyright NPR.
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