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U.S. stocks are on track to post another blockbuster year. The S&P 500 has climbed 24%, marking one of its best consecutive years since 1997 and 1998, and notched 57 record closes. The Dow Jones Industrial and the Nasdaq Composite have risen 13% and 29.8%, respectively.

While geopolitics and global growth slowdown concerns continued to make investors jittery, the adoption of artificial intelligence (AI), the rate cut wave and hopes of growth under President-elect Trump's administration drove stocks. The technology sector has been an outperformer in 2024. Notably, the so-called "Magnificent Seven" stocks have been among the big forces driving the broad market rally and their market-cap valuation surpassed $18 trillion for the first time ever.

The expansion of AI applications holds the promise of ushering in fresh growth opportunities in the tech sector and beyond. Federal Reserve Chair Jerome Powell kicked off the new rate cycle era by initiating a 50-basis-point cut in interest rates in September after holding it at a 23-year high for 14 consecutive months since July 2023. The Fed slashed rates further in November and December by 25 bps each. The central bank envisions only two rate cuts in 2025, in contrast to four projections in September, given the solid labor market and sticky inflation. 

Lower rates reduce borrowing costs for mortgages, credit cards, and other consumer and business loans. These help businesses expand their operations more easily, resulting in increased profitability. This, in turn, stimulates economic growth and boosts the stock market. 

President-elect Donald Trump’s win in November also proved a boon for the market, fueling hopes of deregulation, lower corporate tax rates and a focus on the U.S. economy, which has been resilient. Bitcoin has been the biggest beneficiary of Trump trade. Expectations for a cryptocurrency-friendly administration powered Bitcoin to a record above $108,000. The cryptocurrency soared 136% this year. Tesla (TSLA - Free Report) was another big winner due to CEO Elon Musk’s close ties to Trump.

On the commodity side, cocoa, the key ingredient of chocolate, has emerged as the top performer of 2024, beating Bitcoin. The price of cocoa has skyrocketed 180% and reached a record high of $12,500 per ton, driven by adverse weather conditions in key producing nations such as Ivory Coast and Ghana, and supply crunch. Precious metals like gold and silver performed well on rate cut optimism and geopolitical tension. Both metals are considered a store of wealth for investors, though the rise in the U.S. dollar kept the prices in check. 

We have highlighted three ETFs each from the best and worst-performing zones of 2024.

Best ETFs

Grayscale Bitcoin Trust (GBTC - Free Report) ) – Up 120.9%

Grayscale Bitcoin Trust is the world’s largest Bitcoin ETF that enables investors to gain exposure to Bitcoin in the form of security while avoiding the challenges of buying, storing and safekeeping Bitcoin directly. It owns and passively holds actual Bitcoins through the Custodian, Coinbase Custody. Grayscale Bitcoin Trust has an AUM of $19.7 billion and charges 1.50% in annual fees from investors. It trades in a volume of 4.2 million shares a day on average.

Roundhill Magnificent Seven ETF (MAGS - Free Report) ) – Up 67.1%

Roundhill Magnificent Seven ETF is the first-ever ETF that offers investors equal-weight exposure to the “Magnificent Seven” stocks. It has amassed $1.8 billion in its asset base and charges 29 bps yearly fees. MAGS trades in an average daily volume of 1.4 million shares.

Global X MSCI Argentina ETF (ARGT - Free Report) ) – Up 60.8%

Argentina's stock market has outperformed the U.S. market on the back of economic reforms implemented by president Javier Milei, who took office in December 2023, helping revitalize the beleaguered South American economy. Global X MSCI Argentina ETF offers exposure to the largest and most liquid securities with exposure to Argentina by tracking the MSCI All Argentina 25/50 Index. It holds 25 stocks in its basket, with key holdings in consumer discretionary, financials, energy and utilities. 

Global X MSCI Argentina ETF has amassed $903.5 million in its asset base and charges 59 bps in annual fees. It trades in an average daily volume of 349,000 shares.

Worst ETFs

Roundhill Cannabis ETF (WEED - Free Report) ) – Down 48%

After surging on the potential reclassification of marijuana as a less dangerous drug early in the year, cannabis stocks fell drastically due to slower progress on the legalization front. Cannabis is a long way from being treated like alcohol or tobacco.

Roundhill Cannabis ETF is designed to offer concentrated exposure to the largest U.S. cannabis companies. The fund may invest in various cannabis-related companies, including producers and distributors, cannabis-related technology companies, and additional cannabis-related ancillary businesses. It offers precise exposure to five leading U.S. MSOs. Roundhill Cannabis ETF has gathered $3.2 million in its asset base so far. It charges 40 bps in annual fees and trades in 10,000 shares a day on average.

Breakwave Dry Bulk Shipping ETF (BDRY - Free Report) ) – Down 46.2% 

Dry bulk shipping stocks were pressured by lackluster global demand as the rebound in the post-COVID demand dissipated. The election of Donald Trump also weighed on shipping sentiment. Breakwave Dry Bulk Shipping ETF is the only freight futures ETF exclusively focused on the dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. Breakwave Dry Bulk Shipping ETF holds freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures based on the prevailing calendar schedule.

Breakwave Dry Bulk Shipping ETF has accumulated $31.3 million in AUM and trades in a good volume of about 115,000 shares per day on average. It charges a higher annual fee of 3.50%.

iShares Lithium Miners and Producers ETF (ILIT - Free Report) ) – Down 44.3%

Lithium prices are on track to decline for a second year due to ongoing global supply glut and turbulence in the electric-vehicle industry. iShares Lithium Miners and Producers ETF offers exposure to global lithium miners and producers who could benefit from increased demand for this limited resource. It holds 31 stocks with key holdings in materials and industrials. 

iShares Lithium Miners and Producers ETF has an AUM of $4.1 million and charges 47 bps in annual fees. It trades in an average daily volume of 11,000 shares.

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