US Stock Market: Explosive Growth on the Edge of Reality

The U.S. stock market has soared 18.4% in 2024 without any real economic support. Find out what's behind the rally and what risks investors face in the near future.

In 2024, the US stock market is on a tear, well above historical averages, and has only grown faster a few times in the last 30 years. However, the current situation raises serious concerns.

Typically, such explosive periods of growth were observed against the backdrop of a recovery from a weak previous year, a strong economic upswing, or aggressive support from the state and central banks. But in 2024, we see a completely different picture: the economy is stagnating, household savings are at zero, and liquidity in the market is shrinking. At the same time, there are no new support programs, as was the case in 2020, when quantitative easing (QE) measures were actively used.

What drives the market?

There are two main factors. The first is the hype around artificial intelligence (AI). Social networks and media are actively promoting the idea that AI will become a new catalyst for economic growth, significantly increasing the productivity and profitability of companies. As a result, many investors rush to buy shares of AI companies, expecting quick results from them.

The second factor is the belief that even if high interest rates begin to slow the economy, the Federal Reserve will step in and ease policy. This creates the illusion of “insurance” for investors who are confident that the central bank will not allow the market to fall too far.

Reality

However, the reality is that the current market growth is not based on real company successes or an improving economy. We are seeing a bubble that is supported only by expectations and manipulation. This is especially noticeable in the shares of the largest companies, which have started to fall while the rest of the market continues to grow. This shows how inflated expectations are in some sectors, especially those related to AI.

So we are dealing with a market that has significantly exceeded historical maximums, but this growth is not supported by real economic indicators. This situation makes the market extremely vulnerable and unpredictable. Although this strategy is currently working, the question arises: how long can the market ignore the real state of the economy and continue to grow against the backdrop of manipulation and hype? Investors should be especially careful, as this situation can lead to a sharp decline at any time.

Author's opinion: If you have shares in AI-related companies, think about what to do. Everyone else should buy popcorn, the movie is about to start.

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