In a surprising turn of events, the stock market concluded its first week of trading in 2024 by halting its remarkable nine-week stock market rally, marking the end of the longest consecutive run in the green since 2004. The Dow Jones Industrial Average and the S&P 500 experienced their worst start to a year since 2016, raising concerns among investors about the stock market bottom and the future direction of the stocks.
Conflicting Economic Signals Impact Market
Friday’s market performance was influenced by conflicting economic signals. The release of strong labour market data, showing the addition of 216,000 jobs in December, initially fueled positive momentum. However, the Institute for Supply Management’s (ISM) report revealing a slowdown in services activity in December introduced uncertainty into the market.
Fed Rate Cut Expectations in Doubt
Investors, who had been optimistic about the prospects of Federal Reserve interest-rate cuts, faced a reality check as doubts emerged about the central bank’s willingness to pivot. The week saw U.S. bond yields continue to rise, with the 10-year Treasury yield surging to 4.04%, complicating predictions of a stock market bottom.
The Tech Stocks Under Pressure
The negative news in the tech sector exacerbated the market downturn. Foxconn, a key iPhone supplier, projected a revenue drop for the first quarter due to sluggish market demand. Apple shares faced additional losses following downgrades by two analysts, resulting in over $175 billion in lost market value. This development highlights the importance of volatile stocks and single-stock futures in shaping market trends.
Mixed Closing for the Week
Despite Friday’s volatility, the S&P 500 managed to close slightly higher, gaining 0.18% to reach 4,697.24. The Nasdaq Composite also edged up by 0.09%, settling at 14,524.07, while the Dow Jones Industrial Average increased slightly by 0.07%, closing at 37,466.11.
Stock Market Rally: Investors Reassess Amid Uncertainty
Overall, investor sentiment shifted as they grappled with the unexpected economic data and reassessed the Federal Reserve’s interest rate stance. The end of the market’s 9-week stock market rally has led traders to reevaluate their expectations for the upcoming weeks and months. Facing uncertainties, the stock market rally confronts a challenging environment in 2024, with volatile stocks and single-stock futures being closely watched by investors.