Market Recap: Stocks Dip as Santa Claus Rally Stalls on December 26, 2024
Major Indexes Show Mixed Performance
As the holiday-shortened trading week continues, the U.S. stock market experienced a slight pullback on Thursday, December 26, 2024. The Santa Claus rally, which typically occurs in the last five trading days of the year and the first two in January, showed signs of stalling.
The Dow Jones Industrial Average fell 135 points, marking its first decline in five sessions. The S&P 500 dipped 0.3%, while the Nasdaq Composite also declined 0.3%. Despite this minor setback, the major indexes are still on track to finish the holiday-shortened trading week in the green.
Week-to-Date Performance
Despite today’s dip, the market has shown resilience this week:
– The S&P 500 is up 1.6% week-to-date
– The Dow has gained 0.8%
– The Nasdaq has rallied 2.1%, boosted by strong performances in megacap tech stocks
Notable Stock Movements
Several stocks made significant moves in Thursday’s trading session:
1. GameStop (GME): Shares jumped more than 4%, extending gains from Tuesday. The video game retailer has climbed more than 77% in 2024.
2. Crypto-related stocks: As bitcoin slid below $100,000, stocks linked to cryptocurrencies faced pressure:
– MicroStrategy (MSTR): Fell about 3%
– Coinbase (COIN): Dropped about 2%
– Riot Platforms: Pulled back more than 2%
3. Honda (HMC): U.S.-listed shares rose more than 4%, bringing the week’s advance to about 14%. This surge follows merger talks announced earlier in the week with fellow Japanese automaker Nissan.
4. Tesla (TSLA): The electric vehicle maker’s stock declined 1.21% to $456.68.
5. NVIDIA (NVDA): Shares of the chip giant dipped 0.86% to $139.01.
Economic Data and Labor Market Insights
The latest economic data provided mixed signals about the state of the U.S. economy:
– Jobless claims: For the week ending December 21, initial jobless claims totaled 219,000, slightly below the 225,000 consensus forecast from Dow Jones.
– Continuing claims: Applications for unemployment benefits rose to 1.91 million, reaching the highest level since November 13, 2021. This increase suggests a potential cooling in the labor market.
Market Sentiment and Analyst Perspectives
Michael Zinn, UBS Wealth Management’s senior portfolio manager, commented on CNBC’s “Squawk Box”: “The Santa Claus Rally may be alive and well. We’ll see, or it could be tough sledding. It’s a sleepy time of year. The institutions aren’t really trading. It’s a little bit more retail driven.”
Investors remain cautiously optimistic about the market’s performance in the final days of 2024 and the potential for continued gains in early 2025.
Upcoming Market Events
As we approach the end of the year, investors should keep an eye on these potential market movers:
1. Year-end portfolio rebalancing: Institutional investors may make adjustments to their holdings, potentially impacting market movements.
2. Federal Reserve policy outlook: Markets are pricing in approximately 35 basis points of easing for 2025, following the Fed’s recent hawkish stance.
3. Economic data releases: Upcoming reports on consumer confidence, housing market data, and manufacturing activity could influence market sentiment in the final trading days of 2024.
Looking Ahead: Market Expectations for Early 2025
As we close out 2024, the market’s focus remains on the Federal Reserve’s rate outlook and potential economic shifts in the new year. The strong performance of U.S. stocks, particularly in the tech sector, has been a driving force behind global market gains. Investors will be closely monitoring economic indicators and corporate earnings reports in early 2025 to gauge the sustainability of this rally.
In conclusion, while today’s market performance showed a slight pullback, the overall sentiment remains cautiously optimistic as we head into the final trading days of 2024. Investors should stay alert to potential volatility and continue to monitor key economic indicators and corporate news that could shape market trends in the early days of 2025.
