Stock Market Experiences a December Dip
It seems like holiday cheer has been put on hold.
After a steady rise over the last five days, stock prices took a downturn in December. The S&P 500 slipped by 0.5%, the Dow dropped 0.9%, and the Nasdaq declined by 0.4%. Interestingly, the utilities sector, typically viewed as a safe haven in the stock market, led this downward trend.
This month didn’t start off well for either stocks or bonds. The iShares 20-Year Treasury Bond ETF saw a decline of 1.6%. In the cryptocurrency realm, Bitcoin has fallen to around $83,840 today, which is a notable drop from its high of over $120,000 back in October.
It looks like a gloomy mood in the bond market may have shifted the focus away from Treasuries. Over in Japan, long-term bond yields have risen to their highest levels in 17 years; yields and prices tend to move in opposite directions, so this is significant.
Moreover, it seems that corporate bond activity might be creating less demand for Treasuries lately.
“I think there’s a bit of a perfect storm happening. There’s a global influence, additional supply, and it all seems to accumulate,” remarked Jason Williams, a strategist at Citi.
General worries about the growing risks associated with global assets could also be impacting cryptocurrencies.
On the stock front, Jonathan Krinsky, chief market strategist at BTIG, observed that stocks surged leading up to Thanksgiving, which might set the stage for what he’s calling a “post-Thanksgiving hangover.”
He added, “While there’s a decent chance that December may end positively, similar to November, the journey there could be quite volatile.”
Monday’s decline in the stock market, albeit minor, is concerning for those who invested in the Dow Jones Industrial Average, especially after feeling hopeful at the start of December. Following the recent election, this period has actually been one of the best months on record.
The historical probability of making a profit in December after an election sits at 74.2%. Essentially, this means only about one in four years post-election sees a loss, according to analysis from SentimenTrader, which has kept track of monthly performance since 1901.
Jay Keppel, a senior research analyst at Sentiment Trader, stated, “Overall, historical outcomes indicate that investors and traders remain confident in a bullish outlook for stocks through December 2025.”
The Dow Jones Industrial Average has historically increased by an average of 1.46% in December over the past century, making it the second-best month of the year, as per Bespoke Investment Group.
