U.S. Stocks May Extend Recent Pullback Going Into End Of The Year

The major U.S. index futures are currently pointing to a slightly lower open on Wednesday, with stocks likely to see further downside after ending yesterday’s choppy session modestly lower.

Stocks may extend the pullback seen over the past few sessions, which has seen the major averages close lower for three straight days as traders cash in on recent strength in the markets.

Despite the recent weakness, the major averages are still poised to post substantial gains for the full year.

The tech-heavy Nasdaq is heading into the final trading day of the year up by 21 percent for 2025, while the S&P 500 is up by 17 percent and the Dow is up by 13 percent.

Overall trading activity is likely to remain subdued, however, as some traders look to get a head start on New Year’s Eve celebrations.

Following the weakness seen during Monday’s session, stocks showed a lack of direction over the course of the trading day on Tuesday. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the day modestly lower. The Dow dipped 94.87 points or 0.2 percent to 48,367.06, the Nasdaq slipped 55.27 points or 0.2 percent to 23,419.08 and the S&P 500 edged down 9.50 points or 0.1 percent to 6,896.24.

Traders initially seemed reluctant to make significant moves ahead of the release of the minutes of the Federal Reserve’s latest monetary policy meeting.

However, trading activity remained subdued after the release of the minutes, which reiterated officials’ mixed views about the outlook for interest rates.

The minutes revealed participants expressed a “range of views” about the restrictiveness of the Fed’s current monetary policy stance.

Most participants judged that further rate cuts would likely be appropriate if inflation declined over time as expected, the Fed said.

However, the Fed noted some participants felt it would likely be appropriate to keep rates unchanged for “some time” following the quarter point rate cut at the December meeting.

The Fed’s next monetary policy meeting is scheduled for January 27-28, with CME Group’s FedWatch Tool indicating an 83.9 percent chance the central bank will leave rates unchanged.

The choppy trading on Wall Street also came as some traders remain away from their desks ahead of the New Year’s Day holiday on Thursday.

Reflecting the lackluster performance by the broader markets, most of the major sectors showed only modest moves on the day.

Biotechnology stocks showed a significant move to the downside, however, with the NYSE Arca Biotechnology Index falling by 1.5 percent.

On the other hand, telecom stocks saw notable strength on the day, driving the NYSE Arca North American Telecom Index up by 1.1 percent. Energy and gold stocks also moved higher.

Commodity, Currency Markets

Crude oil futures are jumping $0.57 to $58.52 a barrel after slipping $0.13 to $57.95 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $4,339.30, down $47 compared to the previous session’s close of $4,386.30. On Tuesday, gold jumped $42.70.

On the currency front, the U.S. dollar is trading at 156.76 yen compared to the 156.39 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is unchanged compared to yesterday’s $1.1746.

Asia

Major stock markets in Asia closed on a mixed note on Wednesday amidst shortened trading hours, holidays and thin trading volume.

Most Asian markets were on track to end the year with strong gains fueled by AI boom. Equity markets in Japan and South Korea were closed.

China’s Shanghai Composite Index edged up 0.1 percent to close at 3,968.84. The day’s trading ranged between 3,955.49 and 3,977.54. The Shenzhen Component Index closed at 13,525.02, shedding 0.6 percent from the previous close of 13,604.07.

The Hang Seng Index of the Hong Kong Stock Exchange slid 0.9 percent from the previous close to finish trading at 25,606.37. The day’s trading range was between a high of 25,791.50 and a low of 25,522.00.

Australia’s S&P/ASX200 Index closed trading at 8,714.30, slipping less than a tenth of a percent from the previous close of 8,717.10. The day’s trading range was between 8,679.80 and 8,732.20.

Silex Systems rebounded 3.9 percent. IDP Education, Digico Infrastructure REIT, Paladin Energy and Nickel Industries all gained more than 2 percent.

Telix Pharmaceuticals topped losses with a decline of 3.6 percent. Deterra Royal Ties, Mesoblast and Iluka Resources all followed with losses of more than 2 percent.

The NZX 50 Index of the New Zealand Stock Exchange closed trading on a flat note at 13,548.42. The day’s trading ranged between 13,522.12 and 13,590.70.

KMD Brands topped gains with a surge of 3.6 percent. Investore Property, Westpac Banking Corp. and Summerset Group Holdings all rallied more than 1 percent.

Infratil led losses with a decline of 2.4 percent. NZX as well as Vital Healthcare Property Trust declined more than 1 percent.

Europe

European stocks have moved modestly lower during trading on Wednesday. With the New Year holiday ahead, and as geopolitical concerns linger, investors are mostly reluctant to make significant moves.

While the French CAC 40 Index is down by 0.2 percent and the U.K.’s FTSE 100 Index is down by 0.1 percent, the German markets remain closed on the day.

In France, Stellantis declined 1.7 percent. Societe Generale, STMicroElectronics, Capgemini, Publicis Groupe, Renault and EssilorLuxottica lost 0.8 to 1.2 percent.

Schneider Electric, Saint Gobain, Unibail Rodamco, ArcelorMittal and Bouygues also drifted lower.

Dassault Systemes, the lone gainer in the CAC 40 index, was up by about 0.4 percent.

Fresnillo shed nearly 3 percent. Experian, Endeavour Mining, Ashtead Group, ICG, Relx, JD Sports Fashion, Dimploa and Smiths Group also drifted lower.

Vodafone Group, Pershing Square Holdings, Marks & Spencer, Rentokil Initial, Anglo American Plc, Entain and British American Tobacco posted modest gains.

U.S. Economic News

First-time claims for U.S. unemployment benefits unexpectedly dipped in the week ended December 27th, according to a report released by the Labor Department on Wednesday.

The report said initial jobless claims fell to 199,000, a decrease of 16,000 from the previous week’s revised level of 215,000.

Economists had expected jobless claims to rise to 220,000 from the 214,000 originally reported for the previous week.

Meanwhile, the Labor Department said the less volatile four-week moving average inched up to 218,750, an increase of 1,750 from the previous week’s revised average of 217,000.

At 10:30 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended December 26th.

Crude oil inventories are expected to decrease by 2.0 million barrels after inching up by 0.4 million barrels in the previous week.