The Week in Review: 01/06/25

“We learn from history that we don't learn from history!” - Desmond Tutu

Good Morning ,

We hope you had a wonderful several weeks of Holidays.

2025 has begun with a whimper… the so-called Santa Claus Rally never materialized, and the indices were marginally lower to begin the year. The major indices lost steam at the end of the year after registering handsome gains for 2024, some rebound action kicked in at the end of last week.

We will see what transpires with traders back today from vacation.

Small stocks were the lone standouts last week and outperformed their larger peers, leading the Russell 2000 to settle 1.1% higher.

The S&P 500 and Nasdaq Composite each declined 0.5% for the week.

The S&P surged 23.3% in 2024 and the Nasdaq Composite closed 28.6% higher for the year.

For the S&P, this was the first back-to-back year of positive 20% or greater returns since the mid-90s.

Last week's price action left the S&P 500 lower over the Santa Claus Rally period, which has been good for an average gain of 1.3% for the S&P 500 since 1950, according to The Stock Trader’s Almanac. It has been observed that significant downturns have occurred (but not always) in years when Santa didn't show. To that end, we must bear in mind that Santa didn't show last year… and the S&P 500 went on to log a 23.3% price gain for 2024.

The S&P 500 also closed below its 50-day moving average last week, which pivoted from support to resistance on Monday. This morning the S&P is back above the 50DMA.

Only three S&P 500 sectors closed higher last week -- energy (+3.2%), real estate (+0.6%), and health care (+0.01%) -- while the materials (-2.1%), consumer discretionary (-1.5%), and consumer staples (-1.4%) sectors logged the largest declines.

Volume was very light due to holiday-related closures last week and many traders and investors were still on vacation. Several foreign markets were also closed on Tuesday (or closed early) and remained closed Wednesday for the New Year's holiday. Our U.S. markets were open for a full day on Tuesday and closed on Wednesday.

This week will also be shortened as the stock market will be closed on Thursday for a National Day of Mourning for former President Jimmy Carter.

This week’s economic news will be centered around the labor market with multiple employment reports being released throughout the week capped by Friday’s nonfarm payrolls report for the month of December. We will also receive Durable Goods on Monday, ISM Services on Tuesday, and the FOMC’s Meeting Minutes from December on Wednesday.

Wishing you abundant blessings in 2025, have a wonderful week!

Michael D. Hilger, CEP^®

Managing Director

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