A Christmas tree stands in front of the New York Stock Exchange (NYSE), on the day U.S. President-elect Donald Trump is expected to ring the opening bell at NYSE to celebrate being named Time magazine’s ‘Person of the Year’, in New York City, New York, U.S., December 12, 2024.
Adam Gray | Reuters
Stock futures ticked lower early Friday as investors look to end the holiday-shortened week on a strong note.
Futures tied to the Dow Jones Industrial Average shed 50 points, or 0.1%. S&P 500 futures and Nasdaq 100 futures dipped 0.16% and 0.23% respectively.
These moves follow thin trading action in Thursday’s regular session. The 30-stock Dow eked out a narrow gain for its fifth winning day, while the S&P 500 and the Nasdaq Composite ended the session just below the flatline.
The three major U.S. indexes are in the green week to date after posting strong back-to-back gains at the start of the shortened holiday week. The S&P 500 is up 1.8% so far this week. The broad market index posted its best Christmas Eve performance since 1974 on Tuesday, according to Bespoke. The Dow has gained 1.1% this week, and a run-up in megacap tech stocks has pushed the Nasdaq Composite 2.3% higher.
Although trading has been muted this week, investors hope stocks will surge into the new year, spurred by the so-called “Santa Claus rally.” This refers to the market’s tendency to rise in the final five trading days of the year and the first two in January.
“The nation is experiencing a collective sigh of relief after navigating through a contentious election cycle and unusual market dynamics to end 2024 with strong year-to-date gains,” said Todd Ahlsten, chief investment officer at Parnassus Investments. “Looking ahead to 2025, the markets are expected to broaden and improve.”
In December, the Nasdaq is on pace for a 4.2% advance, lifted by a jump in Tesla and Alphabet shares, as well as by a rally in Apple that’s brought the iPhone maker closer to a $4 trillion market cap. The S&P 500 is toting a nearly 0.1% gain on the month. The Dow is on pace for its worst month since April, with a roughly 3.5% decline.
S&P 500 likely to rally another 16% in 2025, Capital Economics markets economist says
The S&P 500 is likely to end next year near 7000, or nearly 16% above where the index closed Thursday, according to a forecast reiterated by Capital Economics chief markets economist John Higgins between last week’s Fed meeting and Christmas.
The London-based researcher is sticking with the projection even though “we think Fed policy will be a bit less accommodative than we had previously projected,” and a selloff in bonds drove last week’s weakness in stocks.
The sanguine view is based on a belief that “the 10-year TIPS yield – which is typically used as a proxy for this risk-free component because equities are ‘real’ assets – won’t end next year higher than it is now,” Higgins wrote.
“What’s more, we still aren’t expecting a major deficit-financed fiscal expansion in the U.S. that could bring out the bond vigilantes and drive up Treasury term premia substantially from still-low levels by the standards of the past,” Capital Economics said. In addition, forward 12-months earnings per share for the S&P 500 “will continue to grow a bit next year.”
— Scott Schnipper
Stock futures open Thursday little changed
Stock futures were marginally lower Thursday evening shortly after 6 p.m. ET.
Futures tied to the Dow Jones Industrial Average shed 22 points, hovering just below flat. S&P 500 futures and Nasdaq 100 futures each dipped less than 0.1%.
The three major U.S. indexes have posted strong gains during this holiday-shortened trading week.
— Pia Singh