Could the S&P 500 experience two gains exceeding 1% in the initial three days of a new year? Today might be the day.
We haven’t witnessed this since 2003.
Post-WWII, this phenomenon has occurred 8 times, and each time, the entire year ended positively, averaging a gain of 13.4%.
— Ryan Detrick, CMT (@RyanDetrick) January 6, 2025
The stock market ended slightly lower in its first trading day of the new year on Thursday, mirroring the downward trend of 2024. The Dow Jones Industrial Average fell by 0.4%, marking its fourth consecutive decline, while the S&P 500 decreased by 0.2%. This represented the S&P’s fifth straight drop and the third session running beneath 4,000 points.
Declines were led by major tech players like Apple and Tesla.
The S&P 500 saw a 1.5% decline in the final five days of 2024, marking the most significant year-end drop since 2005. pic.twitter.com/bYVMg6oMnb
— Ryan Detrick, CMT (@RyanDetrick) January 6, 2025
Apple’s stock tumbled 1.3% due to worries about supply chain issues in China, while Tesla experienced a 2.6% drop due to reports of declining vehicle sales in critical markets.
Impact of Tech Giants on Market Decline
In spite of a widespread sell-off in December, the vast majority of global markets finished 2024 positively; U.S. large caps led the pack, with the S&P 500 climbing 25% in 2024 despite a 2.4% drop in December; beyond the U.S., China emerged as the top-performing major equity market with… pic.twitter.com/DA17kFk2gC
— Liz Ann Sonders (@LizAnnSonders) January 6, 2025
In related market updates, attention is shifting towards upcoming employment data later this week, which investors hope will shed light on the economic landscape. Conversely, Nvidia defied the downturn by reaching new record levels after launching innovative AI products during a presentation led by CEO Jensen Huang. The lackluster performance came on the heels of a difficult 2024 for many stocks, which faced challenges from inflation and increasing interest rates.
While analysts express caution, there are hopes for a market recovery later this year as economic measures stabilize and corporate earnings improve. Investors are encouraged to keep a close watch on crucial economic indicators and maintain portfolio diversification to navigate the expected volatility in early 2025. As the new trading year unfolds, market participants are carefully observing economic data and corporate earnings reports to understand potential stock movements in the forthcoming months.
