Stocks dipped slightly on Monday in quiet, holiday-shortened trading, primarily led by a pullback in big tech. Despite the daily decline, major indexes are closing the year with substantial annual gains. Energy stocks climbed with oil prices, while precious metals pulled back, and Treasury yields fell amid expectations of future Fed rate cuts.
U.S. stocks experienced a quiet slip on Monday, marking the start of a holiday-shortened week with only two trading days remaining before the year's end. Markets will be closed Thursday for New Year's Day. Despite the day's losses, major indexes are set to conclude the year with significant overall gains; the S&P 500 fell 0.3% but remains up over 17% for the year and is on track for its eighth consecutive monthly gain. The Dow Jones Industrial Average and Nasdaq composite both saw a 0.5% decrease. Big technology stocks, particularly those with outsized valuations in artificial intelligence like Nvidia (-1.2%) and Broadcom (-0.8%), were among the heaviest weights on the market. This reflects increasing investor skepticism about whether the eventual payoff of AI will justify the hefty investments, following a year of strong performance for the sector. Conversely, energy stocks gained ground, benefiting from rising oil prices; U.S. benchmark crude jumped 2.4% to $58.08 per barrel, and Brent crude rose 2.1% to $61.94 a barrel, with Exxon Mobil climbing 1.2%. Precious metals, including gold and silver, pulled back from recent sharp gains after the Chicago Mercantile Exchange requested more cash from traders. Gold prices fell 4.6% but are still up approximately 64% for the year, while silver prices slumped 8.7% but have still more than doubled overall. In the bond market, Treasury yields fell, with the yield on the 10-year Treasury dropping to 4.11% from 4.13%. This decline is partly due to the anticipation of interest rate cuts from the Federal Reserve in 2025, which has already cut its benchmark rate three times later in the year. The central bank is navigating a complex economic situation characterized by stubbornly high inflation and a slowing job market, where rate cuts aim to offset job growth slowdowns but risk exacerbating inflation. Internationally, markets displayed mixed results. Shares in Taiwan were higher, gaining 0.9%, even as China's military conducted drills around the self-governed island. In contrast, Hong Kong's Hang Seng gave up early gains, falling 0.7%.
