Wall Street closed out a record-breaking year on Tuesday with a mixed performance with stocks sliding in the final trading session of 2024.
Why It Matters
Despite some December losses that have pared back the year's gains, Wall Street has had a record-breaking year. The S&P 500 slipped 0.4 percent to cap a stellar year, gaining 23.3 percent overall and marking its second consecutive year of 20 percent-plus growth, a feat not seen since 1998.
This comes after Wall Street rallied with a strong performance in a holiday-shortened trading session last Tuesday that was led by the technology sector.
This seasonal rally, often referred to as the "Santa rally," has historically delivered average gains of 1.3 percent over the final five trading days of the year and the first two of the new year. Analysts say this period often sets a tone for January and the coming year.
What To Know
The Dow Jones Industrial Average ticked down 0.1 percent, while the tech-heavy Nasdaq shed 0.9 percent, still boasting a remarkable annual gain of 28.6 percent. The Dow, with less exposure to technology, grew by a solid 12.9 percent over the year.
The rally was propelled by a thriving economy, robust consumer spending and a strong job market. Companies like Nvidia and Super Micro Computer, driven by soaring demand in artificial intelligence, were at the forefront of the market's momentum.
Corporate earnings also played a crucial role with S&P 500 companies projected to deliver a broad earnings growth of over 9 percent, according to FactSet.
Meanwhile, fears of an imminent recession dissipated as the U.S. economy navigated higher interest rates without faltering.
Tech Stocks
On the last trading day of 2024, technology stocks weighed on markets. Semiconductor giant Nvidia dropped 2.3 percent, while Apple and AMD slipped 0.7 percent and 1.3 percent, respectively.
However, Energy stocks offered some relief, with Exxon Mobil and Chevron posting gains of 1.7 percent and 1.2 percent.
Despite the S&P 500's decline of 25.31 points to close at 5,881.63, the year's results left investors optimistic.
Inflation, Rate Cuts And Tariff Tensions
Wall Street found renewed optimism as inflation receded closer to the Federal Reserve's 2 percent target, spurring hopes for more interest rate cuts.
However, the Fed adopted a more cautious tone heading into 2025 with inflation still stubborn in certain sectors and new policy uncertainties as President-elect Donald Trump prepares for office. Trump's proposed tariff hikes have raised concerns about potential inflationary pressures in the coming year.
What People Are Saying
Sam Stovall, chief investment strategist at CFRA, told The Associated Press that the stock market's record-breaking turn in 2024 was "certainly much better that what most people on Wall Street, myself included, thought we would get this year," adding, "Historically, a negative Santa Claus rally still resulted in an average gain of almost 6% in the subsequent year.
Michael Hartnett, chief investment strategist at BofA Global Research, previously noted that economic optimism—based on expectations for economic growth and other indicators—is now at its highest level since August 2021, another signal that sentiment might be overheated.
What Happens Next
Markets will pause for the New Year's Day holiday and resume on Thursday with updates on U.S. construction spending and manufacturing data.
Wall Street will also be closed on January 9 to observe a National Day of Mourning to honor former President Jimmy Carter, who passed away on Sunday at age 100.
This article includes reporting from The Associated Press.
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