Wall Street parties like it's 1998 as AI fuels gains unmatched since dot-com era

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The S&P 500 is on track to close 2024 with a gain of nearly 27%, after setting 50 record highs this year

NEW YORK — The S&P 500 is on track to close 2024 with a gain of nearly 27%, after setting 50 record highs this year. That's on top of its 24.2% spurt the year before, a spectacular two-year run unmatched since the dot-com boom.

This time around, it's not dot-com stocks boosting the market but skyrocketing prices for companies in the artificial-intelligence business. Nvidia, for example, has more than doubled in value after surging over three times in 2023 because its chips are powering much of the move into AI. Super Micro Computer, which makes servers used in AI and other computing, has jumped nearly 48% this year after more than tripling last year.

The economy, meanwhile, isn't far removed from its last recession, which struck with the COVID-19 pandemic. But perhaps more importantly, it's so far avoided a recession that many on Wall Street worried was inevitable after the Federal Reserve hiked its main interest rate to a two-decade high in hopes of slowing the economy to beat high inflation.

So what happened to stocks after that fantastic two-year run in 1998? The market rose again in 1999, by 19.5%, as the economy kept growing and the dot-com bubble inflated.

Many voices on Wall Street say the stock market could keep rising in 2025 too, though likely not to the same degree.

The economy is still growing, and the Federal Reserve appears set to keep cutting interest rates to make things easier. That has Jason Draho, head of asset allocation, Americas, at UBS Global Wealth Management, forecasting the S&P 500 could end 2025 at 6,600, for example. That would be a roughly 9% rise from Monday's close.

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