U.S. stock markets reopened for trading on Thursday after the Christmas holiday, but things didn’t go as many investors had hoped. Major indexes experienced subtle declines, reflecting the subdued trading climate typical for this time of year.
The S&P 500 slipped by 0.2%, continuing its recent waves of fluctuation. The benchmark index was coming off three consecutive days of gains, yet Thursday marked a turn downward as trading resumed. The Dow Jones Industrial Average fell by 64 points, also down 0.2%, with the Nasdaq composite facing an even steeper decline of 0.4%, as of 10:02 AM Eastern Time.
This downturn was substantially weighed down by the technology sector. For example, semiconductor giant Nvidia dropped 0.8%, which is noteworthy considering its vast influence over index performance due to its substantial valuation. Other notable tech companies such as Alphabet and Netflix also suffered losses, with the former down 0.7% and the latter falling by 0.9%. To top it off, Meta Platforms saw an even bigger dip at 1.1% lower.
On the labor front, U.S. applications for unemployment benefits held steady last week, though the Labor Department pointed out another significant issue—the continuing claims rose to the highest level recorded in three years. Meanwhile, Treasury yields increased, with the yield on the benchmark 10-year Treasury bond rising to 4.63% from 4.59% just prior to Christmas.
While major European markets were closed on Thursday, trading volumes were expected to be low this week due to thin economic data lined up on the calendar. The last five days of trading for the year, coupled with the first two days of the new year, have historically delivered an average gain of 1.3% since 1950. This suggests the markets have traditionally responded positively, offsetting the lower trading volumes common during this festive season.
Despite the current losses, it is noteworthy to mention how the U.S. stock market remains on track for strong performance heading toward 2024. The S&P 500, for example, is up approximately 26% for the year, staying close to its most recent all-time high which it set earlier this month, marking its 57th record high of the year.
This bullish trend followed President-elect Donald Trump’s victory, which initially stoked hopes for economic growth driven by regulatory relaxations. Yet, with concerns about Trump’s tariffs and other economic policies looming heavily, market fears have arisen. Analysts warn these could potentially lead to inflation, increased U.S. government debt, and complications for global trade relationships.
Even with these political concerns, many believe they will not overshadow the overall strength of the U.S. market heading toward the new year. Despite the slight market pullback post-Christmas, experts indicate the potential for recovering toward the year's end, spurred by the historical trends of positive closeouts.
Time will tell if the markets can perform as they have traditionally done at the year's tail-end. With low trading volumes, the fluctuations are expected to continue as investors keep one eye on economic data and the other on political ramifications influencing market conditions.
