Wall Street Today: Wall Street's main indices opened lower after US stocks fell in morning trading on Friday, December 27, dampening an upbeat holiday-shortened week that started looking like a classic "Santa Claus" rally was unfolding. The S&P 500 fell 1.4 per cent, with over 80 per cent of stocks in the benchmark index losing ground. Still, the main US frontline indices are on track to notch a modest gain of one per cent for the week.
The Dow Jones Industrial Average fell 402 points, or 0.9 per cent, to 42,945. The Nasdaq composite fell two per cent. Both the Dow and the Nasdaq are also holding on to weekly gains. Amid holiday-thinned trading, the 10-year Treasury yield was up slightly but hovered below a near-eight-month high reached Thursday, while the shorter-term Treasury yields eased.
US technology stocks were the biggest drag on the market. Semiconductor giant Nvidia slumped 3.2 per cent. Its valuation has an oversized influence on indexes. Other big tech stocks that lost ground, including Microsoft, with a 2.2 per cent decline. Amazon fell 2.2 per cent, and Best Buy slipped 1.9 per cent.
The sector is closely watched for clues on its performance during the holiday shopping season. Energy was the only sector within the S&P 500 that rose. It gained 0.5 per cent as crude oil prices rose 0.8 per cent. The S&P 500 is on track for a gain of around 25 per cent in 2024. That would mark a second consecutive yearly gain of more than 20 per cent, the first time since 1997-1998.
The Dow is up 14 per cent in 2024, and the tech-heavy Nasdaq is up 30 per cent. The gains have been driven partly by upbeat economic data showing that consumers continued spending and the labour market remained strong. Inflation, while still high, has also been steadily easing.
Also Read: US inflation rises 2.7% YoY in November, logs highest gain in seven months; Wall Street eyes US Fed
The US dollar index, which measures the currency against six other major currencies, was headed for an almost seven per cent annual gain. At the same time, Japan's yen was set for a fourth consecutive year of losses on Friday, as traders anticipated robust US growth. The euro, up 0.09 per cent, stayed close to two-year lows
Tax cuts, tariffs, and deregulation by the incoming administration of US President-elect Donald Trump. Economists view this impact as both pro-growth and inflationary. This would make the US Federal Reserve officials cautious about rate-cutting in 2025.
Japan’s benchmark index surged in Asia as the yen remained weak against the dollar. Stocks in South Korea fell after the main opposition party voted to impeach the country’s acting leader, while markets in Europe gained ground.
Bond yields held relatively steady. The yield on the 10-year Treasury remained at 4.59 per cent from late Thursday. The yield on the two-year Treasury slipped to 4.32 per cent from 4.33 per cent late Thursday.
Analysts said stock markets could change direction as investors returned from holiday and reassessed the risks of elevated US inflation under Trump for richly-valued Wall Street equities. MSCI's broad global share index was 0.32 per cent lower on Friday to remain 1.07 per cent higher for the week.
MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.12 per cent, marking a 1.5 per cent weekly rise, while Tokyo's Nikkei rose 1.8 per cent. Europe's Stoxx 600 was 0.27 per cent firmer on Friday and 0.7 per cent higher for the week.
Traders anticipate the Bank of Japan keeping its monetary policy settings loose and the European Central Bank (ECB) delivering further rate cuts. Traders are pricing in 37 bps of US rate cuts in 2025, with no reduction fully priced into money markets until June. ECB will likely lower its deposit rate by a full percentage point to two per cent as the eurozone economy slows.
Higher US rate expectations pulled the 10-year Treasury yield, which rose as the price of the fixed-income security fell, to its highest since early May on Thursday, at 4.641 per cent. It was last up 1.4 basis points at 4.595 per cent.
In markets, gold prices dipped 0.84 per cent to $2,612.20 per ounce, set for about a 27 per cent rise for the year and the strongest yearly performance since 2011 as geopolitical and inflation concerns boosted the haven asset.
Oil prices were also set for a weekly rise as investors awaited news of economic stimulus efforts in China, the world's biggest crude importer. Brent crude futures rose one per cent to $73.99 a barrel, 1.5 per cent higher for the week.
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