U.S. stock markets experienced a decline on Thursday, continuing the downward trend that began at the end of last year into 2025.
The S&P 500 index dropped by 0.2%, marking its fourth consecutive day of losses, which dampened the momentum from its strong performance throughout 2024. Over the course of the trading day, the index fluctuated, initially rising by 0.9% before reversing to a drop of 0.9%, culminating in its longest losing streak since April.
Similarly, the Dow Jones Industrial Average fell by 151 points, or 0.4%, erasing an earlier gain of 360 points, while the Nasdaq composite index also slipped by 0.2%.
Tesla played a significant role in pulling down market performance after reporting that its vehicle deliveries for the last quarter of 2024 fell short of analyst expectations. The automaker’s stock suffered a 6.1% loss.
Despite being one of the top performers in 2024, especially after Donald Trump’s electoral victory instigated speculation about potential benefits for the company due to Musk’s connections, critics have cautioned that stock prices overall have surged too quickly. A measure monitored by Bank of America, which gauges Wall Street analysts’ stock recommendations, has recently peaked at its highest point since early 2022. According to analyst Savita Subramanian, this level has traditionally served as a contrarian signal, indicating a possible downturn when many analysts are aligned in the same direction.
In another sector, H.B. Fuller saw a 7.5% decrease in its stock price after announcing a slowdown in sales across various customer categories in its adhesive and specialty chemical market.
Conversely, stocks associated with the energy sector made gains as crude oil and natural gas prices rose. Notably, Constellation Energy experienced an 8.4% increase after securing over $1 billion in contracts from the U.S. General Services Administration for power supply and energy conservation efforts.
Some major technology companies managed to limit broader market losses; for instance, Nvidia’s shares climbed by 3% after the company’s powerful performance, which included a staggering nearly 240% increase last year coupled with a better than 170% surge in the current year.
Investors and analysts are optimistic about the continued influence of artificial intelligence (AI) on the market, even though there are concerns about inflated stock prices. As the new year begins, Wedbush analyst Dan Ives remarked that the “tech playbook” remains consistent in what he describes as the third year of a tech-driven AI bull market.
Yet, some expectations are changing among investors. Recently, they have lowered their forecasts regarding the number of interest rate cuts the Federal Reserve may implement in 2025. Despite the Fed’s target inflation rate being set at 2%, inflation remains problematic. Furthermore, Trump’s advocacy for tariffs and specific policies may create additional upward pressure on consumer prices. Consequently, the Fed indicated that it anticipates fewer interest rate reductions in 2025 than previously expected.
The prospects for multiple interest rate cuts were a significant factor that led to numerous record highs for the S&P 500 last year. Remarkably, the economy has shown resilience, despite enduring high interest rates imposed by the Fed designed to combat inflation.
Most investors are predicting that the Fed will maintain its current interest rate during its upcoming meeting, marking the first such decision in four meetings to avoid rate cuts. In the bond market, Treasury yields remained stable, with the yield on the 10-year Treasury dipping slightly to 4.56% down from 4.57%, following a report indicating fewer jobless claims than anticipated. This continues to suggest strength in the job market.
Ultimately, the S&P 500 fell by 13.08 points, settling at 5,868.55, while the Dow decreased by 151.95 points to 43,392.27, and the Nasdaq composite dropped by 30.00 points to 19,280.79.
In international markets, indexes in Hong Kong and Shanghai dropped by 2.2% and 2.7%, respectively, as a survey indicated slower growth in Chinese manufacturing activity through December. Metrics such as new orders, employment, and business sentiment all showed weakness.
Despite optimistic claims from Chinese President Xi Jinping during a New Year’s address, investors are looking for more substantial actions to bolster the world’s second-largest economy and its stock performance. “We have adopted a full range of policies to make solid gains in pursuing high-quality development. China’s economy has rebounded and is on an upward trajectory,” Xi stated in a New Year’s message, according to state media.
European markets showed mostly higher trends, while the Japanese market remained closed for the day.
