
The U.S. Stock Market is facing a challenging December and ending 2024 on a rocky note, with steep declines in major indices like the Dow Jones, S&P 500, and Nasdaq Composite. With just one trading day left, both the S&P 500 and Dow Jones are on track for their worst monthly performance since April.
Key Highlights
December 18
-The Dow Jones experienced 10 consecutive days of losses, nearing an 11-day streak last seen in October 1974.
-The Dow dropped over 1,100 points, while the S&P 500 and Nasdaq Composite dropped 3% and 3.6%, respectively.
December 30
-The Dow fell 1%, and the S&P 500 and Nasdaq Composite declined 1.1% and 1.2%, respectively.
-On December 27, U.S. equities erased earlier weekly gains, marking the S&P 500’s first instance of two declines in the last five trading days of the year since 1952 (Bespoke Investment Group).
Why the Drop?
The Federal Reserve's decision to reduce interest rates by 0.25% came with tempered expectations for 2025. The Fed signaled that only two rate cuts are expected next year, down from the anticipated four, due to persistent inflation and strong employment data.
This cautious outlook led to higher Treasury yields, which triggered widespread selling in the stock market as investors sought safer returns.
Additionally, many investors engaged in profit-taking, selling stocks to lock in gains, which intensified the market decline.
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