Stock Market Today: Wall Street Indexes Close Lower as a Record-Breaking Year Ends

On the last trading day of a remarkable year, stock indexes on Wall Street mostly closed lower. The S&P 500 index, which had shown an early gain, ended the day down 0.4%. During the year, this benchmark index hit 57 record highs and finished with an impressive gain of 23.3%. This marked its second consecutive year of over 20% gains, a feat most recently achieved in 1998.

The Dow Jones Industrial Average also experienced a slight drop of 0.1%, while the Nasdaq composite fell by 0.9%.

Leading the market's surge throughout the year were major technology stocks, which propelled the Nasdaq to a yearly gain of 28.6%. In contrast, the Dow, which has less exposure to technology shares, saw a year-end increase of 12.9%.

Sam Stovall, chief investment strategist at CFRA, remarked that the market's performance in 2024 far exceeded expectations, driven by a robust economy, strong consumer spending, and a healthy job market.

Particularly noteworthy was the rise in the value of companies linked to artificial intelligence, like Nvidia and Super Micro Computer, which contributed greatly to the market's impressive run.

Additionally, the corporate earnings landscape appeared promising, as Wall Street anticipates a broad earnings growth of over 9% for S&P 500 companies this year, according to FactSet. The final numbers will be revealed following the fourth-quarter earnings reports expected in the coming weeks.

Another factor helping to buoy the market was the economy's ability to avoid a recession, which many had feared would follow significant interest rate increases by the Federal Reserve. The Fed aimed to curb soaring inflation by raising its main interest rate to a two-decade high.

With inflation declining closer to the Fed's target of 2%, optimism spread across Wall Street. Investors hoped that the central bank might implement multiple interest rate cuts within the coming year, which would lower borrowing costs and stimulate further economic growth.

However, after three rate cuts in 2024, the Fed indicated a more cautious approach for 2025 as persistent inflation remains a concern. This uncertainty was heightened by challenges posed by President-elect Donald Trump's potential tariff increases on imports, which could lead to a resurgence in inflation.

The market's success extended beyond traditional stocks; Bitcoin, for instance, surged from below $17,000 two years ago to over $100,000. Gold also experienced a stellar year, rising 27.4%.

Despite the overall market drop on the last day, only around 38% of the stocks in the S&P 500 declined. Technology stocks, however, led the downward trend. Nvidia dropped 2.3%, Apple fell by 0.7%, and Advanced Micro Devices decreased by 1.3%.

On the other hand, energy stocks provided some support to the market's performance, with Exxon Mobil climbing 1.7% and Chevron rising 1.2%.

After Berkshire Hathaway disclosed an increased stake in VeriSign, the company's stock went up by 0.9%.

Overall, the S&P 500 concluded the day at 5,881.63, down by 25.31 points. The Dow closed at 42,544.22, losing 29.51 points, while the Nasdaq ended at 19,310.79, down 175.99 points.

The small decline in the market following Christmas raised concerns about the traditional 'Santa Claus' rally, a term used for the typical uptick in U.S. stock indexes during the last five trading days of the year and the first two of the new year. This rally is often linked to positive returns for January and the entire year ahead. However, Stovall mentioned that historically, even a negative Santa Claus rally has still resulted in an average gain of almost 6% in the following year.

Bond yields showed mixed results, with the yield on the 10-year Treasury rising to 4.57% from 4.54% the previous day, while the 2-year Treasury yield remained stable at 4.24%.

Oil prices increased by 1%.

European markets experienced mostly positive outcomes, while Asian markets had mixed results, with exchanges in Tokyo and Seoul closed for the New Year holidays.

U.S. markets will be closed for New Year's Day, with upcoming reports on U.S. construction spending for November expected on Thursday, followed by an update on manufacturing for December on Friday.

The New York Stock Exchange and Nasdaq are scheduled to close their equity and options markets on January 9 to honor former President Jimmy Carter, who passed away recently at the age of 100. This closure continues a tradition on Wall Street to mourn leaders of the nation.

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