US stocks slipped Tuesday, continuing an uncharacteristic limp to the finish after a roaring year of trading.
The S&P 500 (^GSPC) fell 0.1% and the Dow Jones Industrial Average (^DJI) dropped just below the flatline. While the tech-heavy Nasdaq Composite (^IXIC) led the losses at 0.3%.
Despite the sour final stretch, the benchmark S&P 500 is up around 23.8% in 2024, according to Yahoo Finance data. The tech-heavy Nasdaq Composite is up almost 30%. The Dow Jones Industrial Average has posted a more modest 13% gain.
The major indexes are set to post big gains in 2024, a year that was marked by a continued surge in the artificial intelligence trade — led by the “Magnificent Seven” stocks — even as the bull rally broadened across the board.
Meanwhile, the Federal Reserve made its first interest rate cut in four years, and President-elect Donald Trump’s impending return to the White House drove stocks higher in the last two months. (Yahoo Finance’s Josh Schafer and Alexandra Canal have a great rundown of the year’s big themes in charts.)
In commodities, gold (GC=F) is up over 27% this year, on track for its biggest yearly gain since 2010. And in cryptocurrencies, bitcoin (BTC-USD) has rallied over 100% this year, though it has pulled back from the $100,000 level it breached earlier this month.
But overall, the good times have stalled in the last week, as markets have given up some of their big gains — all the more uncharacteristic considering the typical “Santa Claus” rally that marks the end of the year.
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Stocks are set to post massive back-to-back annual gains
While the end of the year fizzle may have put a damper on Wall Street, if you zoom out just a little, the year showered investors with huge gains.
The S&P 500 (^GSPC) is on track to post a 24% gain, matching the return from 2023. These back-to-back annual gains mark the best performance for the index since 1997 and 1998. Thats the best consecutive set of yearly increases since the run up to the dot-com bubble.
And while analysts don’t expect the benchmark index to log another year above 20% — as interest rates may remain elevated and corporate earnings face higher and higher expectations — 2025 is poised to be another robust year for investors.
S&P 500 earnings are expected to grow 15% year over year in 2025, according to FactSet data, fueling another bullish outlook for the year ahead.
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How the Fed and Trump could collide in 2025
President-elect Donald Trump and Federal Reserve Chair Jay Powell have clashed before, and there is a chance they will do so again in 2025.
Their collision could unfold in multiple ways, reports Yahoo Finance’s Jennifer Schonberger.
If Trump’s economic policies cause more inflation, it could force the Fed to tap the brakes and pull back any expected interest rate cuts. The new administration could make some new noise about limiting the Fed’s independence. Or Trump cost-cutter Elon Musk — who recently said the central bank is “absurdly overstaffed” — could seek to overhaul the Fed’s workforce.
Powell said in December that there are still too many unknowns for the Fed to game out how Trump’s proposed tariffs could impact setting rates. However, he did say that some Fed officials have begun to factor in Trump’s proposed policies into their policy assumptions.
Read more about the tensions between the Fed and the incoming White House here.
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Stocks bounce back in final trading day of 2024
US stocks bounced back Tuesday, giving investors one final hurrah to cap a roaring year of trading even as the last batch of sessions limped to the finish.
The S&P 500 (^GSPC) rose 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) gained 0.4%. The Dow Jones Industrial Average (^DJI) put on 0.2%.
The benchmark S&P 500 is up around 23.8% in 2024, according to Yahoo Finance data. The tech-heavy Nasdaq Composite is up almost 30%. The Dow Jones Industrial Average has posted a more modest 13% gain.
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