S&P 500, Nasdaq, Dow slide as strong year nears its close

Four days after the anticipated “Santa Claus” rally, which is statistically one of the most consistent positive seven-day periods of the year for the S&P 500, the benchmark index fell.

But Wall Street strategists say that doesn’t change their stance much about 2025.

Scott Krohnert, equity strategist at Citibank, wrote in a note to clients on Friday that the “fundamentals” that drove the market higher remain intact.

“If the underlying story holds, we will be buyers of first-half declines in the S&P 500,” Krohnert wrote.

Fundstrat head of research Tom Lee agrees.

“From our perspective, nothing has fundamentally changed,” he wrote to me. “The change in the nature of the markets (towards dovish) started with the (Fed) interest rate decision in December and the Fed forecasting lower cuts in 2025 from 4 to 2… and gradually, there has been no real change.”

Shares of Fannie Mae (FNMA) and Freddie Mac (FMCC) rose nearly 30% on Monday after billionaire investor Bill Ackman, who owns shares in both stocks, posted on social media that he expects President-elect Donald Trump to remove the companies from conservatorship. .

Akman Written on X What makes these stocks interesting to him is that “there is a reliable path to getting them out of conservatorship in the relatively short term, in the next couple of years.”

Yahoo Finance’s Ince Ferry reports:

The only thing President-elect Donald Trump can probably count on next year is lower oil prices, thanks to increased global supply.

“Demand is not the main concern as global oil demand growth is expected to slow from 1.3 million barrels per day this year to 1.1 million barrels per day next year,” said Natasha Caneva, head of the agency. “Instead, the real challenge lies in excess supply.” “. JPMorgan’s global commodities strategy team wrote in a recent note.

Caneva and her team expect that the price of Brent crude (BZ=F), the international benchmark, which is on track to average around $80 for 2024, will decline to an average of $73 in 2025.

Analysts point to supplies coming from large-scale offshore projects in Brazil, Guyana, Senegal and Norway.

Read more here.

Nvidia (NVDA) stock reversed direction after a report from The Information that its client, ByteDance, plans to spend $7 billion on its AI chips in 2025 despite US export restrictions on goods to China.

Nvidia shares rose 1.8% at midday after falling as much as 2% earlier in the trading session.

China’s ByteDance, TikTok’s parent company, is reportedly using Nvidia’s Hopper AI chips in data centers outside its home country to avoid US trade restrictions, which have escalated under the Biden administration and are expected to be tightened further under President-elect Donald Trump. It’s not clear whether ByteDance’s $7 billion commitment represents growth in its spending on Nvidia GPUs as of the current calendar year.

Nvidia’s gains on Monday bring the stock into the green for the month after a sharp decline in mid-December.

“NVDA stock has underperformed its large-cap peers since June, but has performed very strongly in 2024,” DA Davidson analyst Gil Loria told Yahoo Finance in an email on Monday. “This means that some investors may want to add NVDA as a front for year-end reports, which should help the stock through the last two days of the year.”

All three major indexes were off their session lows around 12:30 PM ET on Monday.

The S&P 500 (^GSPC), Nasdaq Composite (^IXIC), and Dow Jones Industrial Average (^DJI) fell nearly 0.7%.

The Nasdaq and S&P 500 both fell more than 1.6% at some point during the day. A rally in Nvidia (NVDA) helped the recovery, as the stock, which opened lower on Monday, rose about 1.5%.

U.S. natural gas futures for February delivery rose on Monday, rising as much as 20% as demand for the fuel rose amid expectations for a cooler January. This represents the largest single-day move since the contract began trading in 2012, according to Bloomberg.

The natural gas wave extended to the stock market. The energy sector (XLE) was the only sector in the S&P 500 (^GSPC) in the green, up about 0.15% on the day.

Read more about the rise of natural gas here.

While stocks fell on Monday, 2024 was still a record year on Wall Street, with the S&P 500 hitting 57 records to rank in the top five years for most all-time highs set by the benchmark index.

Two years into the bull market, strategists attribute the rally to strong corporate earnings and huge momentum from several members of the “Magnificent Seven” tech stocks, which includes chipmaker Nvidia (NVDA), along with Tesla (TSLA), and Alphabet (GOOGL, GOOG). . ), Amazon (AMZN), Apple (AAPL), Microsoft (MSFT), and Meta (META).

Read more: 10 charts that tell the story of markets and the economy in 2024.

The Carter Center announced that former President Jimmy Carter died on Sunday at the age of 100 at his home in Plains, Georgia.

on monday, New York Stock Exchange and Nasdaq The announced trading will be closed on Thursday, January 9, on the occasion of the National Day of Mourning.

Yahoo Finance’s Claire Boston reports:

Housing contract activity picked up again in November, as buyers shrugged off higher mortgage rates and took advantage of rising inventory levels.

The Pending Home Sales Index, which tracks contract signings on existing homes, rose 2.2% from October to 79, the highest reading since February 2023, according to the National Association of Realtors (NAR). An index level of 100 is equivalent to contract activity in 2001.

It’s the fourth straight month of gains. Pending home sales increased by 6.9% compared to November 2023.

“Consumers appear to have reset their expectations regarding mortgage rates and are taking advantage of more available inventory,” Lawrence Yun, chief economist at NAR, said in a statement.

All 11 sectors in the S&P 500 (^GSPC) were in the red at the open on Monday. The information technology sector (XLK), the main driver of the stock market’s rise in 2024, fell by about 1.8%, leading the losses.

The “magnificent seven” technology stocks — Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) — were all higher. From 1% to start the trading session.

Futures point to a lower open on Wednesday as stocks continue to struggle during a historically strong stretch for the S&P 500 (^GSPC).

Since 1950, the S&P 500 has risen 1.3% during the seven trading days beginning Dec. 24, well above the typical seven-day average of 0.3%, according to Adam Turnquist, chief technical strategist at LPL Financial. History has shown that if Santa comes and the S&P 500 returns a positive return during this time period, January is usually a positive month for the benchmark index and the rest of the year averages a 10.4% return.

When the S&P 500 is negative during this time frame, January typically doesn’t end in the green, and the average return for the next full year is just 5%, according to Turnquist. Three days into this year’s Santa Claus period, which closes on Friday, January 3, the S&P 500 is down less than 0.1%.

While history may be flashing a warning sign, it’s worth noting that last year’s Santa Claus walk didn’t materialize. January started off poorly, too. However, the S&P 500 is still poised to end the year up more than 20%.

Shares of Boeing (BA) fell more than 3% in pre-market trading Monday morning after one of its planes was involved in a fatal accident in South Korea on Sunday.

The Jeju Airlines 737-800 crashed Sunday morning at Muan International Airport, killing all but two of the 181 passengers on board. Bloomberg reported that investigators will focus on the birds colliding with the plane as well as a malfunction in the landing gear.