US Stock Futures Drop in 2025's Early Trading

Image Credit: Reuters

U.S. stock index futures dipped on Wednesday evening, signaling a cautious start to 2025 after a year marked by AI-driven hype and lower interest rates that led to strong market gains.

However, these gains faltered toward the end of 2024, with the expected “Santa Rally” failing to materialize in late December. Concerns about slower interest rate cuts from the Federal Reserve and uncertainty over President-elect Donald Trump's policies caused investors to lock in profits.

S&P 500 Futures dropped 0.1% to 5,927.25 points, while Nasdaq 100 Futures fell 0.1% to 21,213.50 points, and Dow Jones Futures declined 0.2% to 42,809.0 points by 19:13 ET (00:13 GMT). Trading volumes were low due to year-end holidays, but are expected to increase next week.

Sentiment was further shaken by a deadly vehicle attack in New Orleans and a Tesla Cybertruck explosion outside the Trump Hotel in Las Vegas. 

While Wall Street saw substantial gains through 2024, momentum stalled in the final trading days of December. The S&P 500 closed down 0.4% at 5,881.60 points on Tuesday, with the NASDAQ Composite falling 0.9% to 19,310.79 points, and the Dow Jones dropping 0.1% to 42,544.22 points.

Despite this, all three indexes posted strong yearly performances, with the Nasdaq rising 28.6% thanks to AI-fueled tech stock growth, the S&P 500 up 23.3%, and the Dow gaining 12.9%.

In 2025, Trump’s economic and international policies will be in focus as he takes office, with promises of expansionary policies but also threats of steep trade tariffs on key U.S. trading partners, including China, Canada, and Mexico. This uncertainty contributed to investor caution and profit-taking after an initial rally in response to his November election victory.

Concerns also remain that Trump’s policies could lead to persistent inflation, reducing the likelihood of interest rate cuts by the Federal Reserve. The Fed recently signaled slower rate cuts in 2025, citing persistent inflation and a strong labor market, which contributed to the sell-off in December.

 

 

 

 

Paraphrasing text from "Investing" all rights reserved by the original author.