US stocks declined on Friday, falling short of year-end profit-taking expectations, in a move attributed to the approaching Trump inauguration. Despite a slight loss, the US dollar is set for an 7% annual gain due to robust growth and tax cuts anticipated by investors.
The S&P 500 fell 1.11%, while the Nasdaq Composite ended down 1.49%. The Dow Jones Industrial Average also declined 0.77%. Investors are taking profit ahead of another abbreviated week, which some say is the cause of the sudden sell-off. This is not surprising as year-end rallies often occur in December.
Leading the decline were high-flying stocks like Tesla, Amazon.com, Microsoft, and Nvidia. The MSCI’s broad global share index fell 0.59% on Friday, while Tokyo’s Nikkei rose 1.8%. Europe’s Stoxx 600 also increased 0.67% on Friday.
The US dollar is expected to gain 6.6% in 2024, largely due to the anticipated economic growth and tax cuts under President-elect Donald Trump. The euro, however, has faced a 5.6% loss this year. Traders anticipate the Bank of Japan will keep its monetary policy settings loose.
The US economy is expected to benefit from the new administration’s proposals for deregulation, tax cuts, and tariff hikes. However, economists view these policies as both pro-growth and inflationary. The 10-year Treasury yield rose to its highest since early May due to increased expectations of US rate cuts in 2025.
In other markets, gold prices dipped 0.74%, while oil prices firmed up 0.67%. Cryptocurrencies like bitcoin fell 1.26% on Friday.
Source: https://www.reuters.com/markets/global-markets-wrapup-1-2024-12-27