Stocks still in pullback mode

As traders step into the first full week of 2025, the stock market will be looking to rebound from a rare negative December.

The first two days of the New Year were a split decision. Last Thursday, the S&P 500 (SPX) kicked off 2025 by testing its December lows, and although Friday’s robust rally snapped a five-day losing streak—and gave bulls some momentum heading into the weekend—it wasn’t enough for the index to avoid its third down week of the past four:

The headline: Bulls, bears still looking for upper hand in New Year.

The fine print: Despite the December pullback, last year marked the SPX’s first back-to-back years with 20%-or-larger returns since 1998. The SPX’s 53.2% two-year return as of last Tuesday was its fourth-biggest since 1957.

The number: 37%, the percentage of US household financial assets in stocks—the highest on record, according to Morgan Stanley Wealth Management.¹

The move: Last Monday, February natural gas futures (NGG5) jumped 14.8% amid forecasts for a colder-than-expected January and the end of an agreement allowing Russian natural gas to be transported through Ukraine to Europe.² The market then pulled back -14.1% the remainder of the week, erasing the entire move.

The scorecard: The Russell 2000 (RUT) small-cap index was the lone major index to post a gain last week:

Sector returns: The strongest S&P 500 sectors last week were energy (3.24%), utilities (1.32%), and real estate (0.64%). The weakest sectors were materials (-2.09%), consumer discretionary (-1.46%), and consumer staples (-1.40%).

Stock movers: Gorilla Technology (GRRR) +19% to $22.41 on Monday (and +35% to $24.33 on Thursday), Rigetti Computing (RGTI) +31% to $20 on Thursday. On the downside, Vertical Aerospace (EVTL) -19% to $12.52 on Monday (and -13% to $10.92 on Thursday), Multiplan Corporation (MPLN) -12% to $12.95 on Thursday.

Futures: February WTI crude oil (CLG5) broke out of its consolidation last week, closing Friday at a nearly three-month high of $73.96, up $3.36 for the week. February gold (GCG5) gained $22.80 last week, closing Friday at $2,654.70.

The monthly jobs report highlights what will be the stock market’s third-straight shortened week. US stock exchanges will be closed on Thursday to mark the National Day of Mourning for President Jimmy Carter:

●Monday: S&P Global Services PMI, factory orders
●Tuesday: trade balance, ISM Services Report, Job Openings and Labor Turnover Survey (JOLTS)
●Wednesday: ADP private employment, FOMC minutes
●Thursday: US stock exchanges closed in honor of President Jimmy Carter, NFIB Small Business Optimism Index, job cuts, wholesale inventories
●Friday: Employment Report, consumer sentiment (prelim)

Although “earnings season” won’t officially kick off until big banks report next week, a few companies will report their Q4 numbers this week:

●Monday: Commercial Metals (CMC)
●Tuesday: Apogee Enterprises (APOG), RPM (RPM), Cal-Maine Foods (CALM), Simulations Plus (SLP)
●Wednesday: Albertson’s (ACI), MSC Industrial Direct (MSM), AZZ (AZZ)
●Thursday: Acuity Brands (AYI), Neogen (NEOG), TD Synnex (SNX), Constellation Brands (STZ), KB Home (KBH), PriceSmart (PSMT), WD-40 (WDFC)
●Friday: Blackrock (BLK), Delta Air Lines (DAL)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

The New Year got off to a “by the books” start, with stocks falling last Thursday and rallying Friday. Over the past 68 years, the SPX closed higher on the first trading day of January less than half the time, but rallied on the second day 66% of the time.

And what about the rest of the month? Overall, January has been an up month more often than a down one (40 vs. 28), but it was less bullish over the past 20 years, gaining ground 10 times and falling the other 10:

Also, weak Januaries were more likely to follow weak Decembers. Half of the SPX’s 18 previous negative Decembers since 1957 were followed by negative Januaries. By comparison, only 18 of the 49 positive Decembers (37%) were followed by negative Januaries.³

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¹ MorganStanley.com. The GIC Weekly: What We Got Wrong in 2024 and the Questions We Raised. 12/23/24.
² MarketWatch. Natural-gas prices see biggest jump in nearly 3 years, leading oil higher. 12/30/24.
³ All figures reflect S&P 500 (SPX) daily and monthly closing prices, 1957–2024. Supporting document available upon request.