Market Volatility Persists Amid Holiday Trading
As the year draws to a close, Wall Street stocks experienced a modest decline on Thursday, while U.S. benchmark Treasury yields reached their highest level since April. Despite the typical holiday season boost, the major U.S. stock indexes fell, with the Nasdaq, S&P 500, and Dow Jones Industrial Average dropping 0.09%, 0.07%, and 0.07%, respectively.
Uncertainty Surrounds Trump’s Policies
The market’s cautious tone can be attributed to the uncertainty surrounding President-elect Donald Trump’s policies, which have lifted gold prices and sent the 10-year Treasury yield soaring. According to Peter Cardillo, chief market economist at Spartan Capital Securities, “It’s light volume, and we’re recovering some earlier losses due to profit taking from Tuesday’s rally.”
Santa Claus Rally Expected to Continue
Despite the current volatility, Cardillo believes the year-end rally will continue, driven by low liquidity, tax loss harvesting, and investment of year-end bonuses. The major U.S. stock indexes have already scored significant gains in 2024, with the Nasdaq, S&P 500, and Dow rising 33%, 26%, and 14%, respectively.
Economic Concerns Loom
As 2025 approaches, investors are bracing for the impact of the Federal Reserve’s monetary easing, Trump’s tariffs, and geopolitical tensions. The latest economic data shows new claims for unemployment benefits coming in slightly below estimates, while ongoing claims jumped to their highest level since November 2021, indicating that laid-off workers are struggling to find new jobs.
Global Markets
World stocks are on track to wrap up the year with a second consecutive annual gain of more than 17%, despite escalating geopolitical tensions and economic headwinds. MSCI’s gauge of stocks across the globe fell 0.03%, while emerging market stocks dropped 0.14%. The 10-year U.S. Treasury yield resumed its upward climb, with Cardillo predicting it will reach 4.75% to 5.0% in the near future.
Currency and Commodity Markets
The dollar strengthened against a basket of world currencies, driven by expectations that the greenback will benefit from Trump’s policies. Oil prices were essentially unchanged, while gold advanced on safe-haven demand, rising 0.76% to $2,633.19 an ounce.
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