This week the S&P 500 index fell by 1.06% to an index value of 5942.46. Yet, this week, the index was volatile ranging from a highest index value of 5992.40 to a lowest of 5840.76. The ‘Santa Claus Rally’ failed to materialise, which is where increase in the stock market occur during the last week of December, typically around 1.3%. One of the main reasons the ‘Santa Claus Rally’ failed to occur is profit taking. After a year of high returns, with the S&P 500 jumping up by 28%, investors in the market secured their gains which they have accumulated over the year by selling their stocks, which put a downward pressure on share prices and thus, the S&P 500. Combined with sluggish, underwhelming data from Tesla and Apple, their stocks fell, placing further downward pressure on S&P 500. Furthermore, the volatility in the index this week could be blamed due to the Fed rolling back the expectations of cutting in interest rates due to the fear inflation reigniting. Due to this, some expect, a 10 to 15% stock correction could occur in 2025, as market valuations of companies have been very high in 2024 with expectations of interest rates falling.
From
the Magnificent 7, Tesla and Apple shares have performed the worse, with this
week, Tesla’s share falling by 8.69% and Apple’s share falling by 5.61%. Apple’s
share fell due to release of data on slumping sales and deliveries of iPhones
to China, to be specific a 28% decline in iPhone sales in the December quarter
resulting in a 5% drop in iPhone revenue by 8%. To combat this fall, Apple revealed
discounts to be offered on iPhones in China this week by almost $75 for the
newest models. The fall in Tesla’s shares had arisen due to the release of underwhelming
data on Tesla’s annual deliveries on Thursday, where it failed to meet the last
quarterly delivery target of 2024 by around 50,000 units. Yet, the extent to
Tesla’s fall is driven due to Tesla consistently failing to meet delivery
targets throughout 2024 due to failing to incentivise consumers to demand
electric vehicles. This resulted in significant drop in Tesla’s share, with the
share price at $376 on Thursday, before recovering yesterday to a share price
of $410.
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