Wall Street’s main indexes slipped in the last trading session of 2024 as Treasury yields rose, but the benchmark S&P 500 remained on course to notch its biggest two-year rally in more than two decades.
In midday trading, the Dow Jones Industrial Average fell 57 points, or 0.1%, to 42,516. The S&P 500 and the Nasdaq were down 0.2% and 0.3%, respectively.
The S&P 500 has surged more than 50% in the past two years and is trading near record highs, while the Dow and the Nasdaq are also set for their second consecutive year in gains.
A nearly 100-basis point cut in interest rates in 2024 by the Federal Reserve and a rally in technology stocks in anticipation of boost to corporate profits from artificial intelligence have catapulted equities to record highs in 2024.
The tech, communications services and consumer discretionary stocks have advanced more than 30% this year.
Although AI poster-child Nvidia’s more than 170% surge this year was smaller compared with last year, the rally helped the company notch $3 trillion in market value, while Tesla reclaimed $1 trillion level.
Nvidia was down 1.2%, while the Elon Musk-led automaker slipped 0.3%. Moves are expected to be influenced by thin volumes ahead of New Year’s holiday on Wednesday.
A majority of the 11 S&P 500 sectors traded higher, led by energy stocks on higher crude prices.
Toward the end of the year, risk-taking improved as Donald Trump’s presidential win boosted bets that he would deliver on his promises to ease regulations, cut taxes and raise tariffs to help domestic businesses.
His win also powered small-cap stocks. The Russell 2000 clinched a record high and was set for a second straight year of gains with a nearly 10% increase. Bank shares are up nearly 35% this year.
However, equities hit a rough patch in December, putting the S&P 500 on course for its biggest monthly decline since April, due to higher yields on Treasury notes at a time when equity valuations are stretched and the Fed is cautious.
The yield on benchmark 10-year note eased to 4.5% as inflationary concerns linked to Trump’s policies raises chances of the Fed moderating its rate cuts in 2025.
“Any further gains in equities are unlikely until there is more clarity about what the incoming administration’s tax and tariff policies will look like,” said Raffi Boyadjian, lead market analyst at brokerage XM.
“How earnings expectations evolve in the coming months will also be crucial for Wall Street, particularly for tech and AI stocks.”
Traders expect the first rate cut of 2025 in either March or May.
Meanwhile, Trump’s win has invigorated crypto stocks, with Bitcoin hitting $100,000.
MicroStrategy shares have jumped over 300% this year as it continues buying and holding bitcoin. The stock dropped 1.9% on Tuesday, while Coinbase and MARA Holdings were down 1%
