On Thursday, the American stock futures experienced a dip in light trading following the Christmas holiday. Investors are now reassessing their portfolios and awaiting a potential boost from the anticipated “Santa Claus rally” to close out the year on a high note.
Large corporations such as Nvidia saw a 1.1% drop during premarket trading, while Google’s parent company, Alphabet, experienced a 0.5% decrease. As of 5:03 a.m., Dow E-minis were down by 146 points or 0.33%, and E-minis were down by 26.75 points or 0.44%.
Several markets, including those in London and parts of Asia, remained closed on Thursday. However, the S&P 500 and Nasdaq managed to close Tuesday’s shortened trading day with a third consecutive session of gains, driven by significant growth stocks.
Several key players, including Apple, Tesla, Alphabet, Amazon, Nvidia, Microsoft, and Meta Platforms, contributed to more than half of the S&P 500’s 28.4% total return this year, as stated by Howard Silverblatt, a Senior Index Analyst at S&P Dow Jones Indices. Without these “Magnificent Seven” stocks, the index’s total return would have been 13.2% in 2024, according to Silverblatt.
The U.S. stock market has faced some challenges this month, following election-driven gains in November. This is mainly due to the Federal Reserve’s projection of fewer interest rate cuts in 2025.
Investors are optimistic about a strong year-end finish, often referred to as the “Santa Claus rally” – a trend typically attributed to lower liquidity, tax-loss harvesting, and year-end bonus investments. On average, since 1969, the S&P 500 has seen a 1.3% increase in the last five trading days of December and the first two days of January, as per the Stock Trader’s Almanac.
Data from LPL Financial reveals that a December without a Santa rally often leads to a weaker-than-average performance in the following year.
Before the market opens on Thursday, the Labor Department will release data on weekly jobless claims. However, the current volatility could make it difficult to get a clear picture of the job market.
In other news, the Federal Reserve was hit with a lawsuit by major banks and business groups on Tuesday. They claim that the central bank’s yearly “stress tests” for Wall Street firms are unlawful.
