S&P 500 up about 25% this year with only an 8.5% peak-to-through pullback all year (August).
Just remember the avg year sees an 14.2% correction, which increases the odds it might happen next year. pic.twitter.com/nV9i2yL9dU
— Ryan Detrick, CMT (@RyanDetrick) December 23, 2024
The Dow Jones Industrial Average eked out a narrow gain on Thursday, snapping a 10-day losing streak, its longest in 50 years. The 30-stock Dow added 15.37 points, or 0.04%, to close at 42,342.24. The S&P 500 slid 0.09% to 5,867.08, while the Nasdaq Composite fell 0.10% to 19,372.77.
Going back 40 years, there have been five other times the S&P 500 had more decliners than advancers for 10 consecutive days or more.
A year later? Higher all five times and up 17.9% on avg. pic.twitter.com/eYCUpiz4PU
— Ryan Detrick, CMT (@RyanDetrick) December 23, 2024
Though the major averages initially rebounded to start the session, they shed their gains as the day went on, resulting in a weak close. Seven of the 11 sectors of the S&P 500 ended the day lower. The 10-year Treasury yield also rose for a second day, topping 4.5% and pressuring stocks.
Large speculators/hedge funds still net short S&P 500 futures, but positioning has been getting less extreme pic.twitter.com/JIxiP6KU9n
— Liz Ann Sonders (@LizAnnSonders) December 23, 2024
The major averages struggled after the Federal Reserve indicated it was likely to cut interest rates only twice next year, down from the four reductions forecasted in September. The central bank also trimmed its benchmark overnight borrowing rate by a quarter percentage point on Wednesday, to a target range of 4.25% to 4.5%.
Dow gains, S&P 500 slips
This, from CNBC, captures the significant change in the markets’ probability of a January rate cut by the Fed.
#economy #markets #FederalReserve pic.twitter.com/IZUrkpIp90— Mohamed A. El-Erian (@elerianm) December 23, 2024
Paul Meeks, Harvest Portfolio Management’s co-chief investment officer, told reporters on Thursday, “I think that this correction could last a bit. You’ve seen the marquee name Nvidia come down, so what I would recommend people to do is to maybe keep some powder dry.”
Volatility decreased Thursday, with the Cboe Volatility Index pulling back nearly 13% to about 24. Wall Street’s so-called “fear gauge” soared Wednesday to as high as 28.27.
Fed Chair Jerome Powell addressed this in a press conference, stating, “We’re at 4.3% — that’s meaningfully restrictive, and I think it’s a well-calibrated rate for us to continue to make progress on inflation while keeping a strong labor market.”
Leading up to Wednesday’s rate move, Wall Street was betting on the Fed to stay more aggressive in lowering borrowing costs. However, the revised Fed outlook affected the Dow and other indices, with the Dow dropping 1,123.03 points, or 2.58%, to 42,326.87 on Wednesday, marking its longest losing streak since 1974. The S&P 500 tumbled 2.95%, and the Nasdaq Composite plunged 3.56%.
In other news, key House Republicans announced they reached a short-term government funding deal to prevent a government shutdown that would have started Friday evening. This accord comes after President-elect Donald Trump indicated he would not support a measure that doesn’t include a debt ceiling increase.
