Stock futures began the first trading day of 2025 on a positive note, fueled by optimism that the market can continue the strong performance seen in the past two years. The S&P 500 achieved back-to-back annual gains of more than 20%, sparking hopes for another strong year.
Futures for the Dow Jones Industrial Average rose by 162 points, or 0.38%, while S&P 500 futures gained 30 points, or 0.51%. Nasdaq-100 futures saw the biggest jump, rising 154 points, or 0.73%.
Solid 2024 Returns Despite Weak End-of-Year Trading
While stocks struggled in the final days of 2024, the year still ended on a high note. The S&P 500 surged 23% last year, marking a solid return for investors. The Dow Jones Industrial Average posted a nearly 13% gain, and the Nasdaq Composite outperformed with a 29% advance.
The market’s strong performance was largely driven by excitement surrounding artificial intelligence (AI) and the Federal Reserve’s interest rate cuts.
AI and Tech Stocks Lead the Way
The so-called “Magnificent Seven” tech stocks were at the forefront of this growth. Nvidia, a major player in AI chip development, saw its stock soar by 171%. Meanwhile, Apple, the tech giant behind the iPhone, posted a 30% increase in its stock price. However, these substantial gains prompted some profit-taking as the year ended, contributing to a decline in the broader market. The S&P 500 ended the year with four consecutive down days, a first since 1966.
“Santa Claus Rally” Faces Challenges
Given the recent market trends, the classic “Santa Claus rally” may be hard to achieve this year. This well-known market pattern typically sees rising stock prices during the final five days of December and the first two days of January. On average, the broad market rises by 1.3% during this period and has finished higher nearly 80% of the time, according to historical data from Dow Jones.
However, with weaker end-of-year trading and a cautionary outlook, many investors remain cautious.
Ongoing Concerns Over New Year’s Day Attack
Adding to the market’s uncertainty is a recent incident in New Orleans, where a deadly attack on New Year’s Day is being investigated as a possible terrorist act. The Federal Bureau of Investigation (FBI) is examining the possibility that the suspect, who drove a truck into a crowd, may not have acted alone.
Economic Data and Jobless Claims to Be Released Thursday
The holiday-shortened week has been light on economic data. However, Thursday will bring an update on weekly jobless claims, which will provide insight into the current state of the labor market.
