The three major indexes on the New York Stock Exchange fell together ahead of year-end. With no clear market catalysts, investors continued to focus on squaring positions before the new year.
On the 29th (U.S. Eastern time) at the New York Stock Exchange, the Dow Jones Industrial Average finished at 48,461.93, down 249.04 points (0.51%) from the previous session. The Standard & Poor's (S&P) 500 fell 24.20 points (0.35%) to 6,905.74, and the Nasdaq composite closed at 23,474.35, down 118.75 points (0.50%).
The typically quiet year-end and New Year market continued. With major indexes having posted big gains this year, investors returning from the Christmas holiday stood out for taking profits rather than adding positions.
From the start of the year through the day, the S&P 500 is up 17.41%, the Dow up 13.91%, and the Nasdaq has surged 21.56%. All three indexes are likely to finish higher for a third straight year.
Still, as the rally has continued, caution in the market is growing. While the prevailing view is that the artificial intelligence (AI) theme that has driven stocks over the past three years will remain valid next year, concerns about lofty valuations and bubbles are being raised at the same time.
In this environment, the so-called "Santa rally" has not appeared in this year's market. The Santa rally typically refers to the tendency for U.S. stocks to rise during the last five trading days of the year and the first two trading days of the new year. This year, with prices having been priced in before Christmas, the year-end market has been relatively quiet.
Chris Larkin, head of investing at E-Trade under Morgan Stanley, said, "With fewer major economic releases this week, internal upward momentum will be the key focus for the market," adding, "For stocks to end the year with double-digit gains, technology shares need to play a crucial role."
On the day, market attention tilted more toward precious metals and commodities than stocks. Spot silver briefly topped $80 per ounce for the first time ever in overnight trading, but fell more than 9% intraday as profit-taking hit. Gold prices moved in tandem, dropping more than 4%.
By sector, energy, utilities, consumer staples, and real estate rose, while consumer discretionary and materials fell around 1%.
Among mega-cap tech stocks with market capitalizations above $1 trillion, Tesla stood out, falling more than 3%. The rest moved relatively little. DigitalBridge, which specializes in investment in AI infrastructure, jumped 9% on news that SoftBank is moving to acquire it.
Meanwhile, U.S. pending home sales in November continued to improve and hit the highest level in about three years. According to the National Association of Realtors, pending home sales in November rose 3.3% from the previous month, and the pending home sales index came in at 79.2, the highest since Feb. 2023.
According to the CME FedWatch Tool, the federal funds futures market priced the probability of holding the benchmark rate steady in Jan. at 83.9%. That is higher than 82.3% near the prior close.
The Cboe Volatility Index (VIX) rose 0.60 point (4.41%) from the previous session to 14.20.