In the closing days of 2024, financial markets experienced significant volatility as investors assessed various economic indicators and anticipated events. Major stock indices faced setbacks, with the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all recording losses. The anticipated "Santa Claus" rally, typically a strong period for stocks, failed to materialize. Despite this, market analysts remain optimistic about the fundamentals driving the year's gains. Additionally, notable developments included a temporary boost in natural gas futures and a surge in Fannie Mae and Freddie Mac shares following comments from investor Bill Ackman.
The year-end trading was also marked by external factors such as the closure of stock exchanges in honor of former President Jimmy Carter and expectations of lower crude oil prices in 2025. While the overall market sentiment remained cautious, some sectors like energy and housing showed positive trends, signaling potential areas of growth in the coming year.
Stock Market Performance in the Final Week of 2024
As 2024 draws to a close, major stock indices encountered challenges. The S&P 500, which had a remarkable year with over 25% gains, saw a decline of more than 1%. Similarly, the tech-heavy Nasdaq Composite fell approximately 1.2%, while the Dow Jones Industrial Average dropped around 0.8%. These movements were influenced by a retreat in the 10-year Treasury yield from its seven-month high. Last week, stocks closed lower, particularly affected by declines in Big Tech names like Tesla and Nvidia.
The highly anticipated "Santa Claus" rally, historically one of the most consistent positive periods for the S&P 500, did not occur this year. Since 1950, the S&P 500 has typically risen 1.3% during the seven trading days starting December 24. However, in the current period, it is down nearly 1%. Despite this, market strategists maintain confidence in the underlying fundamentals that have driven the year's gains. Citi US equity strategist Scott Chronert emphasized that if these fundamentals hold, pullbacks in the first half of 2025 could present buying opportunities. Fundstrat's Tom Lee agreed, noting that there has been no fundamental change in market conditions.
Noteworthy Developments Impacting Financial Markets
Beyond the stock indices, several other developments significantly impacted the financial landscape. Natural gas futures surged by up to 20%, marking the largest one-day move since 2012. This rise reflected increased demand for fuel amid colder weather forecasts. The energy sector was the sole bright spot in the S&P 500, gaining about 0.15%. Meanwhile, Fannie Mae and Freddie Mac shares skyrocketed nearly 30% after billionaire investor Bill Ackman expressed optimism about their removal from conservatorship within the next two years.
In a related development, the New York Stock Exchange and Nasdaq announced they would be closed on January 9, 2025, to honor former President Jimmy Carter, who passed away at age 100. Analysts predict lower crude oil prices in 2025 due to growing global supply. JPMorgan's Natasha Kaneva forecasted Brent crude to average $73 in 2025, down from an estimated $80 in 2024. Furthermore, housing contract activity continued to rise for the fourth consecutive month, indicating resilience in the real estate market despite elevated mortgage rates.