Stocks were under pressure last week as the Fed Chair’s hawkish comments unsettled investors ahead of the holiday season.
The Dow Jones Industrial Average received the hardest hit, falling 2.25 percent. The Standard & Poor’s 500 Index lost 1.98 percent, while the Nasdaq Composite Index dropped 1.78 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, retreated an eye-catching 3.38 percent.1,2
No Santa Yet
Divergence marked the start of the week as megacap tech stocks rallied while the Dow Industrials fell for the eighth-straight session—its longest losing streak since 2018.3
Following its scheduled December meeting, the Fed announced it was cutting short-term rates by a quarter point, as widely expected. However, Fed Chair Jerome Powell also signaled fewer rate reductions next year. “From here, it’s a new phase and we’re going to be cautious about further cuts,” he said in his post-meeting news conference.
The rate news surprised investors, who were anticipating more dovish comments from the Fed Chair.4,5
Markets were under pressure again early Friday as the spending bill to fund the federal government appeared to stall. But a lower-than-expected inflation update boosted the market and helped erase some of the earlier losses.6,7
Holiday Cheer
Despite a difficult week, stocks are on track to have their second consecutive year of double-digit returns. Year to date, through Friday’s close, the S&P 500 was ahead by about 24 percent. In 2023, the S&P 500 also tacked on 24 percent for the full year.8
Footnotes and Sources
- The Wall Street Journal, December 20, 2024
- Investing.com, December 20, 2024
- CNBC.com, December 16, 2024
- CNBC.com, December 17, 2024
- The Wall Street Journal, December 18, 2024
- CNBC.com, December 19, 2024
- CNBC.com, December 20, 2024
- The Wall Street Journal, December 20, 2024
