The US stock market ended lower on Monday, December 30th, 2024, continuing a trend from the previous week and capping off an otherwise strong year for the major indexes. The S&P 500 (^GSPC) dropped over 1%, the tech-heavy Nasdaq Composite (^IXIC) fell roughly 1.2%, and the Dow Jones Industrial Average (^DJI) declined about 0.8%.
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The decline coincided with a retreat in the 10-year Treasury yield (^TNX) from a seven-month high, hovering around 4.55%. Last week’s closing saw a similar downturn, primarily driven by losses in Big Tech giants like Tesla (TSLA) and Nvidia (NVDA).
The Missing “Santa Claus” Rally
The traditional “Santa Claus” rally, a historically consistent period of positive returns for the S&P 500, failed to materialize this year. Since 1950, the S&P 500 has averaged a 1.3% gain during the seven trading days starting December 24th, significantly higher than the typical seven-day average of 0.3%, according to LPL Financial. However, the S&P 500 is down almost 1% during the current period.
Market Performance and Outlook
Despite Monday’s losses, 2024 delivered substantial gains for the major indexes. The S&P 500 surged over 25%, the Nasdaq soared over 30%, and the Dow climbed a more moderate 14%. With only two trading days remaining in the year, investors had hoped to recapture some of the year’s upward momentum. Looking ahead, market analysts remain optimistic about 2025, citing strong underlying fundamentals.
NYSE and Nasdaq Closure
In other news, the New York Stock Exchange and the Nasdaq will be closed on Thursday, January 9th, 2025, to observe a National Day of Mourning for former President Jimmy Carter, who passed away on Sunday at the age of 100.
Sector Performance and Notable Stock Movements
Energy (XLE) was the only S&P 500 sector to finish in positive territory, gaining about 0.15%, driven by a substantial surge in natural gas futures. Natural gas futures for February delivery soared as much as 20% due to increased demand amid forecasts for a colder January. This marked the largest single-day price movement since the contract began trading in 2012.
Nvidia (NVDA) initially fell but later reversed course, ending the day up 1.8%. This followed a report that ByteDance, the parent company of TikTok, plans to spend $7 billion on Nvidia’s AI chips in 2025. Shares of Fannie Mae (FNMA) and Freddie Mac (FMCC) also saw significant gains, each rising nearly 30% after billionaire investor Bill Ackman expressed optimism about their potential removal from conservatorship. Boeing (BA) shares dipped over 3% following a fatal crash of a 737-800 aircraft in South Korea.
Market Breadth and Economic Indicators
The market rally’s breadth has narrowed considerably in December, with the S&P 500 Equal Weight Index (^SPXEW) underperforming the S&P 500. This divergence suggests that fewer stocks are participating in the market’s gains. Additionally, pending home sales rose for the fourth consecutive month in November, indicating continued strength in the housing market despite elevated mortgage rates.
Conclusion
While Monday’s market decline and the absence of a “Santa Claus” rally may raise some concerns, the overall performance of the US stock market in 2024 remains impressive. The coming year will likely bring new challenges and opportunities, and investors will be closely watching economic data and corporate earnings for signs of continued growth.
