Experiencing its worst year-end drop since at least 1952. Between 𝐂𝐡𝐫𝐢𝐬𝐭𝐦𝐚𝐬 𝐚𝐧𝐝 𝐍𝐞𝐰 𝐘𝐞𝐚𝐫’𝐬 𝐄𝐯𝐞, 𝐭𝐡𝐞 𝐢𝐧𝐝𝐞𝐱 𝐟𝐞𝐥𝐥 𝐛𝐲 𝟐.𝟔% , marking the most significant holiday decline in over seven decades. This marks only the 12th instance since records began where the S&P 500 saw a drop of more than 1% during this period. Furthermore, data reveals that 2024's year-end losses extend a streak of such declines that hasn’t been seen since 1966.

The market downturn was largely influenced by a December 18 statement from Federal Reserve 𝐂𝐡𝐚𝐢𝐫𝐦𝐚𝐧 𝐉𝐞𝐫𝐨𝐦𝐞 𝐏𝐨𝐰𝐞𝐥𝐥, signaling a continued hawkish stance on monetary policy. The announcement triggered a broad sell-off across stocks, a surge in bond yields for the third consecutive week, and a near 15% drop in Bitcoin from its record peak. Meanwhile, credit spreads widened, further dampening investor sentiment as the year came to a close. The disheartening finish left a stark contrast to the overall success of the stock market throughout the year.

Despite the 𝐩𝐨𝐨𝐫 𝐲𝐞𝐚𝐫-𝐞𝐧𝐝 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞,2024 proved to be a strong year for the S&P 500, with the index posting a 24% gain, far exceeding Wall Street’s most optimistic projections. The robust growth forced analysts to continually revise their forecasts upwards, trying to keep pace with the index’s impressive rally. Historical data suggests that following similar year-end declines, the S&P 500 has often rebounded with solid gains in the subsequent year. After previous declines of more than 1%, the median gain the following year was approximately 12%, offering some hope for 2025.

However, the outlook for 2025 remains fraught with uncertainty. Inflation concerns, trade policies, and immigration regulations all present challenges for the new year. Adding to the unpredictability is the presence of a new, less predictable president in office. Beyond the 𝐔.𝐒., 𝐠𝐥𝐨𝐛𝐚𝐥 𝐦𝐚𝐫𝐤𝐞𝐭𝐬 𝐚𝐥𝐬𝐨 𝐟𝐚𝐜𝐞𝐝 𝐭𝐮𝐫𝐛𝐮𝐥𝐞𝐧𝐜𝐞, 𝐰𝐢𝐭𝐡 𝐂𝐡𝐢𝐧𝐚’𝐬 yuan falling past 7.3 per dollar, reflecting efforts to stimulate economic growth. Chinese stocks hit their lowest levels since September, and sovereign bond yields in China dropped to all-time lows. Meanwhile, U.S. Treasury yields showed slight movements, with traders keeping a watchful eye on future decisions from the Federal Reserve.
#USmarket