Markets Fall to Close Record Year – What’s Next for 2025?

The market party paused on Monday as US stocks fell in one of the last trading days of 2024. The Dow ( DIA ) fell 1.2% (down 505 points), the S&P 500 ( SPY ) lost 1.2%, and the Nasdaq (NASDAQ) :QQQ) fell 1.4%. But let’s not lose perspective, 2024 has been a blockbuster year, with the S&P 500 and Dow up 23% and 14%, respectively, their best performances since 2021. Nasdaq? Up 30% and heading into its longest quarterly winning streak since 2021. Monday’s plunge? Taking profits in a thinly traded market is likely only at the end of the year, as investors look to the famous “Santa Claus Rally” that historically fuels a January rally.

Economic tea leaves are already swirling in 2025. Goldman Sachs is calling for a rate cut trifecta, starting with a 25 basis point trim in March, followed by cuts in June and September, to land in a sweet spot of 3.5%-3.75% . And it’s not just about tariffs. Goldman also expects the Fed to wind down its balance sheet drain in the middle of the year. Meanwhile, Monday’s data was a mixed bag. Chicago PMI missed expectations, keeping investors wary of growth momentum. On the bright side, government yields fell, giving the growth-heavy tech sector a breather.

In the corporate world, Boeing (NYSE:BA) had a rough day, falling more than 4% after a tragic plane crash in South Korea. On the energy front, crude edged up WTI and Brent both rose 0.8%, but the broader picture is less rosy, with both benchmarks looking at annual losses linked to a slowdown in Chinese demand. As investors close out 2024, the real question is whether January will come roaring in with a rally or start with a reset. Either way, the stage is set for what promises to be an action-packed 2025.

This article first appeared on GuruFocus.