The recent surge in US tech stocks marks a significant milestone in the investment landscape, especially highlighted by the Nasdaq 100 Index achieving a historic close above 20,000 pointsThis surge has not only resulted in elevated stock prices for many tech giants but has also propelled Elon Musk, the CEO of Tesla, to a net worth of $447 billion, making him the first individual in history to surpass the $400 billion mark in terms of personal wealthThe performance of the US stock market in the coming months remains a topic of both optimism and caution, given the current macroeconomic indicators like bond yields and the overarching uncertainty surrounding forthcoming government policies.

On December 11, the US stock market exhibited mixed results, but it was the tech sector that stood out, leading to gains in both the Nasdaq and the S&P 500 indexesThe Nasdaq’s performance has been particularly impressive with an increase of over 35% for the year

Forecasts from Wall Street were confirmed when Dan Ives, a prominent analyst from Wedbush, projected early in the year that tech stocks would further rise by 25% in 2024, with the Nasdaq potentially hitting the 20,000 threshold.

On this notable trading day, the so-called "Big Seven" American tech firms—including Apple, Amazon, Google, Meta, and of course, Tesla—all saw their shares rise strikingly, with share prices reaching unprecedented intraday highsGoogle, specifically, reported the most considerable gains following the announcement of a powerful new chip designed for quantum computing, which is forecasted to deliver advancements in computation capabilities.

Macroeconomic factors played a role in driving trader optimismOn the same day, the US Department of Labor released November inflation data that closely matched market expectationsSubsequently, investors increased their bets on potential interest rate cuts by the Federal Reserve

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According to the CME Group’s FedWatch Tool, market participants assigned a greater than 90% probability that the Fed would lower rates by 25 basis points in the forthcoming meetingTom Hainlin, a senior investment strategist at U.SBank Asset Management, expressed a sense of confidence in the Fed’s direction, mentioning that the strong market momentum lacks significant hindrances that could halt its ascent before the end of the year.

However, market analysts have exercised a level of caution regarding the recent attainment of the 20,000-point markCallie Cox of Ritholtz Wealth Management pointed out that while crossing such round numbers can invoke investor enthusiasm, it merely reflects the tech sector's outstanding performance without indicating any substantial shift in the market's fundamental dynamics.

Besides the robust performance of the Nasdaq, the S&P 500 is also in the spotlight, with bullish sentiments surrounding its future

Evercore ISI Research projected that after surpassing the 6,000 target for the year, the S&P 500 could reach 6,600 by mid-2025. Emmanuel, the Senior Managing Director of Evercore’s equities team, cited that this current bull market is still in its infancy, considering that historical bull markets have averaged a 152% increase, whereas the ongoing bull market, which began in October 2022, has seen a 65% rise thus farGiven that bull markets typically last over 50 months, the current one, only 25 months old, has room for further growth.

This context is particularly significant against the backdrop of personal wealth generation in the tech industry, particularly for Elon MuskOn December 11, Tesla's stock jumped by nearly 6%, closing at $424.77 per share, surpassing its previous all-time high set in 2021, bringing the company's market capitalization to approximately $1.36 trillion

Consequently, Musk's net worth surged to $447 billion, overshadowing Amazon founder Jeff Bezos by a staggering $198 billion, a notable increase of $218 billion from the beginning of the year alone.

Moreover, there are indications that Tesla may benefit significantly from government policies surrounding autonomous vehicle technologyReports suggest that the Biden administration prioritizes creating a federal framework for fully autonomous vehicles, which could catalyze growth in the self-driving division of TeslaAdditionally, news surrounding SpaceX's valuation has further bolstered Tesla's stock valuesRecently, insider communications revealed that SpaceX plans a stock buyback at a valuation of $350 billion, solidifying its status as the world's most valuable private startup.

As for Musk’s ventures, his AI startup, xAI, has also gained attention, especially after raising an impressive $5 billion in the latest funding round, now valued at $50 billion

The company is reportedly placing substantial orders with Nvidia, a move viewed as enhancing the value of Musk's tech empire.

Looking ahead, historical data reveals that since 1928, the average return of the S&P 500 between election day and the last trading day of the year has been modest, yet shows a tendency for positive trajectoriesMost analysts maintain a bullish outlook for US equities leading into 2025. Notably, Bank of America projected that the cycle of interest rate cuts could spur corporate earnings growth to reach 13% by 2025, surpassing the 10% expected for 2024. Goldman Sachs predicts a prospective rise in the S&P 500 of between 7% and 15% by the end of 2025, with estimates placing it between 6,500 to 7,000 points.

In this light, with the resilience of the US economy, a prevailing upward trend in the market seems probable, with profitability serving as a key driver

Analysts advise focusing investments on cyclical industries such as finance and industrial sectors while highlighting themes associated with artificial intelligence and small-cap stocks.

Despite these optimistic projections, some analysts do warn of the potential risks related to long-term returns on US equitiesDeutsche Bank noted that the S&P 500 has only recorded one instance of achieving more than 20% returns in consecutive yearsFurthermore, Goldman Sachs warned that the annualized return for the S&P 500 could fall to around 3% over the next decade, aligning closely with expected inflation rates.

Lory Van Dussen, CEO of LVW Consulting, echoed the sentiment of caution, expressing concerns about the current market environment's risks"While there is anticipation of rate cuts from the Fed and subsequent economic growth, real-world risks remainInvestors should proceed with vigilance," she advised