Major indices are set to close 2024 with strong gains

In Currencies

The U.S. dollar eased slightly as U.S. bond yields pulled back, yet it stayed close to recent highs with the year-end approaching. The index remained on track for monthly gains of over 2%, pushing its year-to-date increase to nearly 7%.

In Stocks

The S&P 500 dropped overnight, with investors appearing to lock in profits as the strong year nears its close. By the market's close, the Dow fell 418 points (1%), the S&P 500 slid 1.1%, and the Nasdaq dropped 1.2%.

Despite the day's declines, 2024 is shaping up to be a banner year for equities. The S&P 500 and Dow are set to end the year with gains of over 23% and 14%, respectively, marking their best performances since 2021, while the Nasdaq has surged roughly 30%.

All three benchmarks are also poised to close out a strong fourth quarter, with the Nasdaq on track for its longest winning streak since mid-2021, following Donald Trump’s recent election victory.

Meanwhile, Citi in a Monday note, encouraged investors to capitalize on potential pullbacks in the S&P 500 early in 2025. They highlighted strong fundamentals and secular growth drivers as factors that could support another year of double-digit earnings growth. The investment bank projected a year-end 2025 target of 6,500 for the S&P 500.

In Commodities

Oil prices edged higher on Tuesday after data revealed that China’s manufacturing activity expanded for a third consecutive month in December, signaling some economic stabilization. Brent crude rose to $74.59 per barrel, while WTI climbed to $71.61 per barrel.

Despite the gains, both benchmarks are set to close 2024 with annual losses for the second straight year, with Brent down 3.2% and WTI dipping 0.1%, amid persistent demand concerns in major consuming nations. The slower growth in China's factory activity suggests that fresh stimulus measures are providing support, though challenges remain for the world's second-largest economy.