The much-anticipated “Santa Rally” has fallen flat this year, with U.S. stocks closing out 2024 on a disappointing note.
For only the third time in history, the year-end trading period has ended with consecutive losses for the major indices, leaving investors without the seasonal boost they had hoped for. Meanwhile, Bitcoin has shed $15,000 from its peak, adding to the gloom.
Stock market wraps up 2024 with rare year-end decline
U.S. markets have struggled through the final days of December, typically characterized by gains. Stock futures painted a bleak picture on Monday, with Dow Jones futures dropping by 81 points or 0.19%. The S&P 500 fell 0.16%, while Nasdaq-100 futures remained flat. Despite these setbacks, 2024 has been a strong year overall. The S&P 500 has gained 25.2%, the Dow is up 14.1%, and the Nasdaq Composite has surged 31.4%.
However, December has been challenging, with the S&P 500 slipping 1% and the Dow down 4.3%, marking their worst monthly performances since April. Historically, the “Santa Rally” period, which includes the last five trading days of December and the first two in January, delivers an average S&P 500 gain of 1.3%. This year, a combination of Friday’s selloff and year-end profit-taking has derailed those expectations.
Nasdaq outshines while Dow lags
The Nasdaq Composite remains a bright spot despite broader market struggles. It has risen 8.4% in the fourth quarter, marking its longest winning streak since 2021. The S&P 500 has also seen a fifth straight positive quarter, gaining 3.6%. The Dow, however, has underperformed, scraping by with a modest 1.6% increase this quarter.
The disparity among indices highlights the uneven nature of this year’s market performance. Tech-heavy stocks have driven much of the Nasdaq’s success, while the Dow’s reliance on traditional industries has weighed its results.
Bitcoin loses momentum amid market cooldown
Bitcoin’s rally has taken a hit in cryptocurrency after reaching an all-time high of $108,400 earlier this year. Currently valued at $93,420, Bitcoin is down $15,000 from its peak. The decline comes after months of enthusiasm driven by President Donald Trump’s pro-crypto policies.
Other cryptocurrencies, including Ether and Dogecoin, are also under pressure as expectations for Federal Reserve rate cuts ease. Despite its recent struggles, Bitcoin remains up 120% for the year, far surpassing the returns of traditional investments like stocks and precious metals. Investors are now eyeing Trump’s January 20 inauguration for further details on his cryptocurrency agenda.