Time to read: 2 Minutes
As we turn the page on 2024 and look ahead to the possibilities of 2025, it’s worth taking a moment to review how the markets performed last year. Based on a recent market review by Tyler Braun, Director of Financial Planning at The Tranel Financial Group (click here to watch the video), there’s much to consider about the trends that shaped the financial landscape.
When we think about the market, two major indexes often come to mind: the S&P 500 and the Dow Jones Industrial Average. These indexes offer perspectives on market movements but tell slightly different stories about 2024.
S&P 500: The Role of Technology
The S&P 500, which many consider a broad indicator of the economy which represents 500 companies, gained 23% in 2024. This increase was driven largely by the performance of technology companies. Today, over 31% of the S&P 500 is composed of technology firms, and seven major companies—Facebook (Meta), Apple, Amazon, Google (Alphabet), Microsoft, Tesla, and Nvidia—play an outsized role. Often referred to as “The Magnificent Seven,” these companies dominate the index because it’s cap-weighted, meaning larger companies have a greater influence on overall results.
Without these seven companies, the S&P’s outcome would have been much closer to historical averages, demonstrating the significant impact of the technology sector on market performance last year. For investors, this concentration is a reminder of how sector performance can drive broader trends in the market.
Dow Jones Industrial Average: A Broader Mix of Industries
In contrast, the Dow Jones Industrial Average represents 30 companies, including healthcare, financials, technology and consumer goods. Technology makes up only 18% of the Dow Jones, and this lower concentration contributed to its more modest 12% gain in 2024. The difference between these two indexes highlights the importance of understanding sector dynamics when evaluating the market. While the technology sector had a noteworthy year, other industries contributed more moderately to overall gains.
Key Takeaways for Investors
Looking at 2024’s performance, one clear takeaway is the importance of diversification. Markets can be heavily influenced by a handful of sectors or companies, but balanced portfolios that spread investments across multiple areas may help mitigate risk and capture opportunities.
As we move forward, it’s helpful to stay informed about which sectors are driving market trends and how they align with your financial goals. While technology was talked about last year, other industries may play a more prominent role in the future.
If you’d like to learn more about these market trends and how they might impact your portfolio, check out Tyler’s full market review on our YouTube channel.
Here’s to a thoughtful and well-prepared 2025!
All securities through Money Concepts Capital Corp. Member FINRA / SIPC. Investments are not FDIC/NCUA insured. No bank or credit union guarantee. May lose value. Money Concepts Advisory Service is a Registered Investment Advisor with the SEC. The Tranel Financial Group is an independent firm not affiliated with Money Concepts Capital Corp.
Note: This content is for informational purposes only and should not be considered financial or tax advice. Please consult with your financial or tax advisor for guidance tailored to your specific situation.