On December 18, 2024, Wall Street experienced a dramatic sell-off as projections from the Federal Reserve crushed hopes for a string of interest rate cuts in 2025. The Dow Jones Industrial Average dropped 1,100 points, falling for the 10th days in a row, its longest losing streak in a decade. The S&P 500 and the Nasdaq Composite also took heavy hits, falling 3.2 percent and 2.8 percent, respectively.
Thumbs Down on Fed’s Projections Set Off Market Jitters:
The Federal Reserve projected a slower pace of monetary easing for 2025 in its most recent policy update. Investors had been pricing in multiple rate cuts to tackle economic slowdown, and recent comments from Fed Chair Jerome Powell indicated a more cautious approach. “Economic resilience and persistent inflationary pressures justify a measured pace,” Powell said in the news conference after the meeting.
The change in outlook frightened markets, as traders reset their expectations. The bond market showed signs of elevated volatility, with the 10-year Treasury yield spiking to 4.85 percent, the highest level in months.
Sector Performance:
All 11 sectors of the S&P 500 finished in the negative territory, with technology and consumer discretionary stocks most affected by losses. Big names like Apple, Tesla and Microsoft were all down more than 4%. Financials also faltered, with shares of major banks like JPMorgan Chase and Goldman Sachs down nearly 3%.
Defensive sectors such as utilities and healthcare, which often act as safe havens during market turmoil, experienced relatively smaller drops but were not enough to cushion the wider rout.
Investor Sentiment, Macro Outlook:
Market analysts attribute the heightened bearish sentiment to a combination of factors. Besides the Fed’s cautious approach, geopolitical tensions and fading global growth are weighing heavily on equities. “The market’s reaction highlights the tenuousness of investor confidence as we head into 2025,” said Lisa Kramer, a senior market strategist.
What’s Next?
With only weeks remaining in 2024, and scrutiny on upcoming economic data including GDP expansion and figures on consumer spending, investors will be watching. Any evidence of more economic weakening could add to the market’s woes.
We’ll be updating this story as it develops — stay here for how Wall Street is navigating a raucous end to the year.
