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Thursday, January 2, 2025
The first trading day of the new year began as well as could be expected, but gave away its big gains mid-day, as market participants seem to be getting cold feet as they look to prospects — or potential headwinds — just ahead. Keep in mind the S&P 500 has gained more than +20% for two consecutive calendar years; with as many question marks as exist currently, investors are apparently proceeding with caution.
Lots of talk revolves around uncertainty regarding incoming tariffs, government layoffs and aggressive immigrant deportment promised by the incoming Trump administration. But market trepidation goes much further: both Europe and China continue to show economic sluggishness, along with government structures up in the air in some of Europe’s largest economies. And then we must consider the deadly attacks over New Year’s here in this country.
Construction Spending Comes In Weaker
Earlier today, November Construction Spending figures were released, coming in unchanged from the previous month — below the +0.3% expected and the upwardly revised +0.5% from October. Year over year, Construction Spending was +3.0%, weighed down a bit by -1.3% spending in multi-family housing, which had pulled away from single-family construction earlier last year.
This is not an economic metric on which much pivots directly, but it does appear to be giving a similar glimpse as other economic prints, and even the overall market as of late: slowing down. The S&P and Nasdaq now have spent five straight sessions closing lower; the Dow — just off a long losing streak of its own — is down in the past four trading days.
What to Expect Friday in the Stock Market
Market participants will try again Friday to stem the tide of losing trading sessions. It's officially the end of the "Santa Claus Rally" this year, but maybe that's just as well — he's been a bit of a Grinch this holiday season.
ISM Manufacturing numbers for December will be out after Friday's opening bell. They are expected to come in slightly below the previous month to 48.0%, and still below the 50% level which determines growth versus contraction. We'll also see more December Auto Sales tricvkle in through the course of the trading session.
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