Wall Street Closes Lower Amid Year-End Uncertainty

NEW YORK (Reuters) – Wall Street closed in negative territory on Monday, in light volume, at the top of a holiday-shortened week, in the second-to-last trading session of a year marked by significant gains across all three indexes.

End-of-year tax positioning, valuations, climbing Treasury yields, and uncertainties about 2025 contributed to a risk-off sentiment. The major U.S. stock indexes recovered from early lows but still ended down over 0.5%.

> “Investors are saying the S&P, even after this recent sell-off, is up over 50% in the last two years,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. “Maybe we should take some chips off the table and protect those gains. And when you have thin volume, it doesn’t take much to move markets.”

Despite recent weakness, 2024 has been a stellar year for U.S. equities. The Nasdaq is on track for about a 30% annual gain, while the S&P 500 is headed for just over a 24% rise for 2024. The Dow remains up just over 13% from the last closing levels of 2023.

Sector gains are led by technology, communication services, and consumer discretionary, each set to achieve nearly 30% growth or more. In contrast, materials appear likely to be the only sector to finish the year with a loss.

This year has also seen geopolitical tensions escalate in the Middle East and significant shifts in U.S. monetary policy, with the Federal Reserve cutting interest rates for the first time in over four years.

In U.S. politics, former President Donald Trump was convicted of 32 felonies earlier this year, later winning re-election after President Joe Biden exited the race, allowing Vice President Kamala Harris to replace him as the Democratic candidate.

Nvidia (NASDAQ:NVDA), a major chip maker, saw its stock surge nearly 180% this year, reflecting strong investor confidence in advancing artificial intelligence (AI) technology. In November, Nvidia replaced Intel (NASDAQ:INTC) in the Dow Jones Industrial Average.

Looking ahead, Pursche noted, “Next year is going to be much more volatile for investors, especially in the first quarter. However, there’s a fair chance of stocks performing reasonably well, with mid-single-digit returns next year.”

He added that the expected combination of lower taxes and a more favorable regulatory environment likely means stocks could rise beyond their fair valuations, especially if Trump fulfills campaign promises.

According to preliminary data, the S&P 500 lost 63.95 points, or 1.06%, ending at 5,907.43 points. The Nasdaq Composite fell 235.25 points, or 1.19%, to 19,486.79, while the Dow Jones Industrial Average dropped 410.18 points, or 0.95%, closing at 42,582.03.

Boeing (NYSE:BA) shares declined following an emergency safety inspection ordered by South Korea’s acting president Choi Sang-mok of its entire airline operation, in response to the deadliest air accident in the country’s history involving a Boeing 737-800.

Crypto stocks, including MicroStrategy, Coinbase (NASDAQ:COIN), and MARA Holdings, also saw declines.

Biden has declared a national day of mourning on Thursday, Jan. 9, to honor the late former President Jimmy Carter.

The U.S. stock market will be closed that day.