This past week, US equity indexes experienced notable declines, primarily influenced by pressures from technology and communication services mega-cap companies, coinciding with a period of traditionally low trading volumes and relatively light macroeconomic data. The S&P 500 index closed the week at 5,942.52, representing a decline from 5,970.84 the previous week.
Similarly, the Nasdaq Composite finished at 19,621.68, down from 19,722.03 a week earlier. The Dow Jones Industrial Average ended Friday's session at 42,732.13, down from 42,992.21 a week prior. Despite the overall downward trend, the markets saw a significant rebound on Friday, with the S&P, Nasdaq, and Dow registering gains of 1.3%, 1.8%, and 0.8%, respectively, thereby narrowing the weekly decline. In sector performance, technology and communication services lagged, with both categories sitting at the bottom of the charts.
In contrast, the energy sector emerged as one of the few areas in the green, demonstrating resilience in a challenging market environment. Tesla ($TSLA) faced a significant drop of approximately 11% over the week, despite a robust recovery on Friday. Other major players in the declining mega-cap category, defined as companies possessing a market capitalization exceeding $200 billion, included Apple ($AAPL), Microsoft ($MSFT), and Amazon.com ($AMZN), all of which contributed to dragging the overall indexes lower. Trading volumes were, as anticipated, relatively subdued across the three major indexes throughout the holiday-shortened week, further exacerbating price movements in either direction.
Notably, equity markets closed early at 1 PM ET on Tuesday and remained shut on Wednesday to observe the New Year holidays. In economic news, the ISM manufacturing index showed signs of improvement, rising to 49.3 in December from 48.4 in November, contrasting with expectations for a decline to 48.2 as per a Bloomberg survey.
The ISM indicated that demand is on the upswing. Other significant developments during the week included the conclusion of a lengthy agreement that had permitted the transit of natural gas produced by the Russian energy company Gazprom through Ukraine and the re-election of Republican Mike Johnson as House Speaker in a tightly contested vote, which tested the unity within the Republican party..