Weekly Recap: Worst Year-End Performance in 72 Years

Weekly Recap: Worst Year-End Performance in 72 Years

Market Recap

The Santa Claus Rally on Christmas Eve delivered its best performance since 1974. However, beginning on Boxing Day, U.S. markets faced their worst year-end performance in 72 years. The S&P 500 tumbled 2.6% from Christmas to the end of the year, marking the steepest decline for this period since 1952 (MarketWatch).

The stock market has faced significant pressure following the Federal Reserve's 25 bps rate cut. The rise in the 10-year Treasury yield signals heightened risk in the market, with stock market dynamics now heavily influenced by developments in the debt market. The Fear & Greed Index is nearing "extreme fear" (CNN Business), yet Friday’s market action offered a glimmer of hope, with increased buying activity. For the stock market to regain momentum, yields must decline. Next Monday is shaping up to be a pivotal "make or break" moment for stocks. As we conclude the first trading week of 2025, market concerns are intensifying over rising yields and their impact, compounded by a strengthening dollar on a relative basis.

This Friday, the S&P 500 closed at 5,942, up 1.26%, while the NASDAQ gained 1.77%, closing at 19,621. The Dow Jones Industrial Average also advanced, rising 0.8% to close at 42,732. Over the past week, the S&P 500 increased 0.37%, the NASDAQ climbed 0.81%, while the Dow Jones slipped 0.33%. Meanwhile, small caps in the Russell 2000 saw a 1.64% gain, with the index closing the week at 2,268.

Rivian Automotive surprised investors with a remarkable 24.45% jump, driven by higher-than-expected vehicle deliveries (Investing). Joby Aviation (JOBY) and Archer Aviation (ACHR) each gained over 20% after the Commerce Department announced on Thursday that it is considering a ban on Chinese drones (Fool).

Earlier today, Manufacturing PMI was reported at 49.6%, reflecting contraction in the manufacturing sector for the ninth consecutive month and the 25th time in the past 26 months (PR Newswire). U.S. markets are expected to respond positively to weak economic data, as it increases the likelihood of further stimulus measures.

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