Market Recap: Stocks Slide as 2024 Draws to a Close
Major Indexes Tumble Amid Year-End Jitters
As the final trading days of 2024 unfold, Wall Street experienced a significant downturn on Monday, December 30. The market’s stellar performance throughout the year is ending on a sour note, with investors grappling with concerns over interest rates, government debt, and potential inflationary pressures.
The S&P 500 fell 1.5%, with nearly every stock within the index losing ground. Despite this setback, the benchmark index remains on track for its second consecutive year of gains exceeding 20%. The Dow Jones Industrial Average dropped 624 points, or 1.5%, while the Nasdaq Composite declined 1.7%.
Tech Giants and Boeing Weigh Heavily on Markets
Big Tech companies were among the most significant contributors to the market’s decline. Apple (AAPL) and Microsoft (MSFT) both fell by 1.7% and 1.6%, respectively. Their outsized influence on the broader market due to their substantial valuations exacerbated the overall slump.
Boeing (BA) faced a particularly challenging day, with its stock plummeting 3.2% following a tragic incident involving one of its 737-800 jets in South Korea. The crash, which resulted in 179 fatalities, has prompted South Korean authorities to inspect all 737-800 aircraft operated by airlines in the country. This disaster compounds Boeing’s existing troubles, including recent labor disputes and ongoing safety concerns with its top-selling aircraft.
Airline Stocks Feel the Impact
The ripple effects of the Boeing incident were felt across the airline industry. United Airlines (UAL) saw a 3.5% decline, while Delta Air Lines (DAL) and American Airlines (AAL) experienced drops of 2.3% and 0.8%, respectively. All these carriers include Boeing aircraft in their fleets, highlighting the interconnected nature of the aviation sector.
Bond Yields and Commodities
In the bond market, yields retreated, with the 10-year Treasury yield falling to 4.55% from 4.63% on Friday. The two-year Treasury yield also decreased, settling at 4.26% from 4.33%.
Crude oil prices showed a slight increase of 1.1%, while natural gas prices surged by 9.7%. This boost in natural gas prices provided some support for producers in the sector, with EQT Corp. (EQT) emerging as one of the few market winners, gaining 4%.
Looking Ahead: Economic Data and Market Expectations
As 2024 comes to a close, investors are keeping a close eye on several key factors that could influence market performance in the coming days and into 2025:
1. Federal Reserve Policy: Concerns persist that the Fed may not cut interest rates as aggressively as previously hoped in 2025, with inflation still above the central bank’s 2% target.
2. Government Debt: Treasury Secretary Janet Yellen’s warning about the government hitting its borrowing limit next month has added to market jitters.
3. Upcoming Economic Reports: Investors await data on monthly home sales, house prices, and construction spending, as well as the Labor Department’s report on initial unemployment claims for the week ended December 28.
4. Corporate Earnings: Wall Street anticipates broad earnings growth of over 9% for S&P 500 companies in 2024, with final figures to be tallied following fourth-quarter reports in the coming weeks.
5. Geopolitical Tensions: Ongoing conflicts in the Middle East and potential trade policy shifts under the incoming administration continue to create uncertainty in global markets.
Conclusion: A Year of Growth Ends with Caution
While 2024 has been a remarkable year for the stock market, driven by a growing economy, solid consumer spending, and a strong job market, the final days are marked by caution. Investors are weighing the potential impacts of stubborn inflation, geopolitical risks, and the trajectory of interest rates as they position themselves for the new year.
As trading volumes thin out during the holiday-shortened week, market participants will be closely monitoring these factors to gauge the potential direction of stocks in early 2025. With the New Year’s holiday closure on Wednesday, Thursday and Friday’s economic reports may set the tone for the opening of the markets in January.
