The three major US stock indexes closed in negative territory on Tuesday ending a languid, low-volume session that contrasted with the tumultuous year that preceded it.
2024 included intensifying geopolitical strife, a US presidential election and shifting speculation regarding the path of Fed policy in the coming year.
"There's no Santa Claus rally this week, but investors received the gift of gains in 2024," said Greg Bassuk, chief executive officer at AXS Investments in New York.
"2024 was a massive year for equity gains driven by a trifecta of the AI explosion, a slew of Fed interest rate cuts and a robust US economy."
"It sets the stage for continued strength heading into 2025," Bassuk added.
For 2024, the Nasdaq surged nearly 30 per cent, while the bellwether S&P 500 notched more than a 23 per cent gain, marking the index's best two-year run since 1997-1998.
The blue-chip Dow posted a near 13 per cent advance for the year.
According to preliminary data, the S&P 500 lost 25.14 points, or 0.43 per cent, to end at 5,881.80 points, while the Nasdaq Composite lost 175.99 points, or 0.90 per cent, to 19,310.79. The Dow Jones Industrial Average fell 28.46 points, or 0.07 per cent, to 42,545.27.
Looking ahead to 2025, financial markets are now pricing in about 50 basis points of additional interest rate cuts from the Fed, with investors eying stretched valuations and uncertainties surrounding tax and tariff policies from the administration of President-elect Donald Trump.
"Investors should be cautious regarding the impact of the incoming Trump administration and how that affects certain sectors," Bassuk said, adding that "the instability driven by geopolitics, specifically the Russia/Ukraine war and continued strife in the Middle East could trigger consternation" in companies and sectors with ties to the affected regions.
Bassuk believes the AI boom still has room to grow.
"Valuations have become lofty amid the stock run up, but because we believe that the growth in AI is set to continue and move beyond hardware to software in a massive way across most sectors," he added.
