US stocks fell on Monday, with the Dow Jones Industrial Average dropping 418 points, or just under 1%, as markets approach the end of a record-setting year. The S&P 500 closed the day down by just over 1%, while the tech-heavy Nasdaq experienced the largest decline, falling 1.19%. Investors sold off shares of major tech companies, including Amazon, Alphabet, and Tesla, contributing to the day’s losses.
Boeing’s stock also took a significant hit following the fatal Jeju Air crash, which led South Korea to order inspections of all 737-800 planes, the same model involved in the incident. Shares of Boeing dropped more than 2% in response to the news.
Meanwhile, Bitcoin’s dramatic rally earlier this month continued to lose momentum. The cryptocurrency was trading at $94,000 when US stock markets closed at 4 p.m. ET on Monday. This marked a decline from its high of $106,000 earlier in December, fueled by optimism over the incoming administration’s potential pro-crypto policies.
In the commodities market, natural gas prices surged by 20%, reaching their highest level in nearly two years. Energy markets are bracing for a cold front that could simultaneously increase demand and restrict supply, adding to market volatility.
Year-End Trading Dynamics
The final trading days of the year are often marked by heightened volatility, particularly during a shortened holiday week with low trading volumes. In these conditions, even small movements by active buyers and sellers can have an outsized impact on markets.
Year-end repositioning by traders has also contributed to the recent US stock declines. Investors typically lock in gains during this period while selling off underperforming assets to offset taxable income.
The Dow’s performance has been under pressure for weeks, including its longest daily losing streak since 1974, which was exacerbated by the Federal Reserve’s actions earlier this month. Although the central bank announced a widely expected quarter-point rate cut, officials lowered expectations for the number of rate cuts planned for the upcoming year, triggering a significant selloff across markets.
Annual Performance Still Strong
Despite the recent declines, all three major US indexes—the Dow, S&P 500, and Nasdaq—are on track to close the year with gains. The Nasdaq is set to post the largest annual increase, up more than 32% as of Monday’s close. This performance underscores the strength of technology stocks throughout the year, even with December’s losses.
Looking Ahead
Next week, markets will pause briefly as the New York Stock Exchange and Nasdaq close on Thursday, January 9, to observe a National Day of Mourning in honor of former President Jimmy Carter. The former president will be given a state funeral in Washington, DC, on that day.
As 2024 approaches, investors will closely monitor the ongoing technology, commodities, and cryptocurrency trends while preparing for potential market shifts in the new year.
