The stock market soared this year. What will happen in 2025?

NEW YORK — The stock market climbed to record highs in 2024, extending banner gains achieved the previous year.

The S&P 500 -- the index that most people's 401(k)'s track -- climbed nearly 28% this year, as of Monday.

The tech-heavy Nasdaq leapt a staggering 34% over that period; while the Dow Jones Industrial Average climbed 16%.

Consecutive years of strong stock market performance have posed a quandary for forecasters: Will high stock prices scare off would-be investors in 2025, or will momentum push shares even higher?

Experts have attributed the rise of share prices this year to a set of favorable trends: Solid economic growth, enthusiasm about artificial intelligence and the long-awaited start of interest rate cuts at the Federal Reserve.

Those tail winds are expected to keep pushing stocks skyward in 2025, experts said, but they cautioned about more-than-usual uncertainty that could prevent further gains or even amplify them. The biggest unknown for stocks in 2025, they said: President-elect Donald Trump.

"As we close the books on 2024 and peer into 2025, perhaps the uncertainties this time are of a magnitude beyond the norm," Kevin Gordon and Liz Ann Sonders, a pair of investment strategists at Charles Schwab, said last week. "Good luck figuring this one out."

Good news abounded for the stock market this year, in part because the economy defied doomsayers.

The economy continued to grow at a solid clip in 2024, while inflation fell. That performance kept the U.S. on track for a "soft landing," in which the economy averts a recession while inflation returns to normal.

Gross domestic product grew at a robust 2.8% annualized rate over three months ending in September, the most recent period for which data is available.

"U.S. strength remains undiminished," Seema Shah, chief global strategist at Principal Asset Management, told ABC News in a statement.

Inflation has slowed dramatically from a peak of more than 9% in June 2022. A months-long stretch of progress earlier this year helped nudge the Federal Reserve toward its first interest rate cuts in four years.

In recent months, the Fed has cut its benchmark rate three-quarters of a percentage point, dialing back its fight against inflation and delivering some relief for borrowers saddled with high costs.

Over time, rate cuts ease the burden on borrowers for everything from home mortgages to credit cards to cars, making it cheaper to get a loan or refinance one. The cuts also boost company valuations, potentially helping fuel returns for stockholders.

The Fed is expected to continue cutting interest rates next year, though a recent bout of stubborn inflation could slow, or even pause, the lowering of rates, experts previously told ABC News.

"Markets expect gradual rate cuts next year, which would imply inflation stays under control, the job market hums along at an acceptable pace, stocks rise, and everybody is happy," Callie Cox, chief market strategist at Ritholtz Wealth Management, said in a statement to ABC News.

"Reality isn't that cut and dry, though," Cox added.

Some analysts pointed to Trump's policies as a major source of uncertainty for the nation's economic performance and, in turn, the stock market.

Trump has vowed to cut taxes for individuals and corporations, which could spur economic growth and raise stock prices, some experts said. However, they added, Trump's proposed tariffs could hurt some U.S. producers and retailers that depend on imported raw materials, and may cause a resurgence of inflation. As a result, some stocks could suffer.

"The most significant wild card on the table for 2025 will be the potential implementation of tariffs," David Sekera, chief U.S. market strategist for Morningstar, said earlier this month.

Since 1990, there have been 12 years in which the S&P 500 has gained 20% or more, Cox said. The stock market crossed that threshold last year, and is almost certain to do so when 2024 comes to an end. It will be difficult for the stock market to achieve that feat for a third consecutive year, Cox added.

"If you're expecting a repeat of 2024, you're asking a lot of the market gods," Cox said.

Still, the enticing possibility of another rally will draw investor interest as observers watch for any early signs of sputtering.

"The opportunities for investors are plenty, but so are the obstacles," Shah said.

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