Stocks managed to recover from a shaky start to close higher on Monday as Wall Street began a holiday-shortened trading week.
The S&P 500 finished the day up 0.7% after dipping 0.5% earlier in the session. The Dow Jones Industrial Average also bounced back from an early decline, ending with a 0.2% gain. Meanwhile, the Nasdaq composite, which is heavily weighted towards technology, experienced a more substantial increase of 1%.
A notable contribution to these gains came from technology and communications stocks, which helped to offset declines in consumer goods companies and other sectors across the market. Semiconductor powerhouse Nvidia saw a significant increase of 3.7%, while Broadcom surged by 5.5%, both providing essential support for the broader market.
On the downside, major retailers faced losses, with Walmart seeing a drop of 2% and PepsiCo declining by 1%. In another development, Japanese automotive manufacturers Honda and Nissan are in discussions about a potential merger that could also involve Mitsubishi Motors, leading to a notable 12.7% rise in Honda’s U.S.-listed shares, although Nissan’s shares remained flat.
In health sector news, Eli Lilly’s stock climbed by 3.7% following the approval of Zepbound, praised as the first and only prescription treatment available for adults dealing with sleep apnea. Conversely, department store chain Nordstrom’s shares fell by 1.5% after they announced plans to go private in a $6.25 billion transaction involving family members of the Nordstrom founders and a Mexican retail consortium.
The closing figures for the day included the S&P 500 rising by 43.22 points to 5,974.07, the Dow gaining 66.69 points to reach 42,906.95, and the Nasdaq increasing by 192.29 points to 19,764.89.
Investors were presented with a fresh overview of U.S. consumer confidence on Monday. According to the Conference Board, confidence levels declined in December, with the consumer confidence index dipping to 104.7 from 112.8 in November, falling short of Wall Street’s predicted figure of 113.8.
This lower-than-anticipated consumer confidence report follows several optimistic economic updates from the previous week. One of these reports indicated a robust growth rate of 3.1% for the overall economy during the summer, surpassing initial estimates. Furthermore, recent data on unemployment benefits highlighted a strong job market.
Additionally, a Friday report showed that a favored inflation measure by the Federal Reserve was slightly below economists’ expectations for last month, reviving concerns over inflation rising again. This has been an ongoing worry for both Wall Street and the Fed.
While the central bank has implemented three interest rate cuts this year, inflation has persistently remained above the 2% target. The Federal Reserve has indicated a possibility of fewer rate reductions in the upcoming year than previously expected due to inflation concerns.
Expectations surrounding additional interest rate cuts have propelled the S&P 500 to a remarkable gain of about 25% in 2024, which has included 57 record highs throughout the year.
Anticipation of rising inflation has compounded uncertainties looking toward 2025, amid speculation about how the labor market will develop and the shift in economic strategies under the incoming administration of President Donald Trump.
Brent Schutte, the chief investment officer at Northwestern Mutual Wealth Management Company, noted, “In simple terms, much of the vigorous market activity observed before last week was fueled by assumptions that a favorable scenario was the prevailing outlook for 2025.”
In the bond market, Treasury yields saw an uptick, with the yield on the 10-year Treasury rising to 4.59% from 4.53% the previous Friday.
European markets generally closed lower, while Asian markets experienced gains.
Looking ahead, Wall Street is set to digest several more economic reports this week, including the release of the U.S. November report on new home sales scheduled for Tuesday. A weekly summary of unemployment benefits is anticipated on Thursday.
It’s also worth noting that U.S. markets will close early at 1 p.m. Eastern on Tuesday in observance of Christmas Eve and will remain shuttered on Wednesday for the Christmas holiday.
