On Christmas Eve 2024, the stock market wrapped up another year with modest gains, driven primarily by technology stocks. The major indices showed mixed movements, reflecting the holiday trading dynamics and investor sentiment.
The S&P 500 climbed by 0.7%, the Dow Jones Industrial Average edged upwards by 0.2%, and the tech-heavy Nasdaq Composite rose nearly 1%. This performance follows the indications from the Federal Reserve concerning interest rates, which have put investors on edge about the future monetary policy.
Traders noted the significance of tech stocks, particularly as large companies like Nvidia, Tesla, and Meta led the rally. Nvidia's shares surged prominently, reinforcing its status among the top performers this year, with over 3% gains on the session. Tesla also ended the day close to session highs, reflecting the persistent demand for electric vehicles and innovative technology.
After much volatility throughout the previous weeks, Christmas Eve trading benefited from the holiday spirit, and the increased activity among traders highlighted important themes of the year, namely the advancements within artificial intelligence and technology sectors.
Louis Navellier, founder of Navellier & Associates, noted, "It's been an AI-driven year, and it appears that's how it is headed heading intothe year-end." This statement encapsulates the focus many investors have placed on tech's potential as they anticipate where 2025 will lead.
Despite the positive outcomes seen on Christmas Eve, there is caution among analysts. Jay Hatfield from Infrastructure Capital Advisors commented on the market's performance outlook, noting, "We might get a Santa Claus rally, but those aren'tthat powerful [of] rallies." He also maintained his year-end target for the S&P 500, forecasting it might only rise to around 6,000, implying limited increases from current levels.
Meanwhile, American Airlines faced challenges following grounding orders by the U.S. Federal Aviation Administration, causing its shares to drop by over 3%. Such operational issues highlight the volatility and unpredictability of markets, especially during peak travel times like the holiday season.
Trading volumes were reported as thin leading up to Christmas, typically expected for this brief trading week as investors take time off to celebrate. The markets were set to close early at 1 p.m. ET on Christmas Eve, continuing the trend of light trading this week with expectations of few trades on the day due to many European markets already closed for celebrations.
While the outlook for post-Christmas trading remains cautious, many investors are still hoping for the 'Santa Claus rally'—a phenomenon where stock prices tend to increase during the last week of the year. Historically, the S&P 500 has gained on average 1.3% during the last five trading days of the year and the first two days of January, according to the Stock Trader's Almanac.
Though past performance is not always indicative of future results, market participants remain optimistic as they digest the year-end reports and reflect on the broader economic climate. The Federal Reserve’s influence continues to play on traders' minds as upcoming economic data begins to shape expectations for interest rate cuts or hikes as 2025 approaches.
Overall, Christmas Eve 2024 provided the stock market with slight respite, giving investors time to reassess strategies as they prepare for the new year. With mixed market performance and cautious optimism, traders remain vigilant as they approach 2025, hoping the winds favor technological innovation and economic improvements.
