The stock market exhibited resilience on Monday, closing higher despite a choppy start and a weaker-than-expected consumer confidence report. This positive performance marks the beginning of a holiday-shortened week on Wall Street.
The S&P 500 overcame an early 0.5% dip to finish with a 0.7% gain, while the Dow Jones Industrial Average managed a modest 0.2% increase after recovering from initial losses. The tech-focused Nasdaq composite outperformed both, rising by a significant 1%.
Strong performance in the technology and communications sectors fueled the market’s overall gains, counterbalancing losses experienced by consumer goods companies. Semiconductor giant Nvidia, a significant market influencer due to its substantial valuation, saw a 3.7% rise, further bolstered by Broadcom’s 5.5% climb. Conversely, Walmart and PepsiCo experienced declines of 2% and 1%, respectively.
In other corporate news, Japanese automakers Honda and Nissan announced ongoing discussions regarding a potential merger, possibly involving Mitsubishi Motors. This news propelled Honda’s U.S.-listed shares by an impressive 12.7%, while Nissan’s stock remained unchanged. Eli Lilly experienced a 3.7% surge following regulatory approval of Zepbound, a novel prescription medication for adult sleep apnea. Meanwhile, department store Nordstrom saw a 1.5% decline after agreeing to a $6.25 billion privatization deal led by the Nordstrom family and a Mexican retail group.
At the close of trading, the S&P 500 stood at 5,974.07, reflecting a 43.22-point increase. The Dow reached 42,906.95, adding 66.69 points, and the Nasdaq closed at 19,764.89, with a 192.29-point gain.
The Conference Board’s latest report revealed a dip in consumer confidence for December, falling to 104.7 from November’s 112.8, against market expectations of 113.8. This unexpected weakness contrasts with several positive economic reports released last week, including a revised GDP growth rate of 3.1% for the summer and continued strength in the job market as indicated by unemployment benefit applications.
Friday’s inflation report offered some respite, showing a slight decrease in the Federal Reserve’s preferred inflation gauge. This positive news somewhat alleviated concerns about rising inflation that have been impacting Wall Street and influencing the Fed’s monetary policy decisions.
The Federal Reserve recently implemented its third interest rate cut this year, but inflation remains persistently above the 2% target. Consequently, the central bank has hinted at potentially fewer rate cuts in the upcoming year compared to earlier projections, primarily due to inflation concerns.
Market expectations for further interest rate cuts have contributed to the S&P 500’s approximately 25% gain in 2024, including a record-breaking 57 all-time highs.
Looking ahead to 2025, lingering uncertainties remain, including the trajectory of the labor market, the impact of shifting economic policies under the incoming Donald Trump administration, and persistent inflation concerns. Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company, noted that the strong market performance leading up to last week was largely predicated on a best-case scenario for 2025.
Treasury yields saw an uptick, with the 10-year Treasury yield rising to 4.59% from Friday’s 4.53%. European markets predominantly closed lower, while Asian markets showed gains. This week, investors await further economic data, including November’s new home sales report on Tuesday and the weekly unemployment benefits update on Thursday. U.S. markets will observe an early closure at 1 p.m. Eastern on Tuesday for Christmas Eve and remain closed on Wednesday for Christmas.
