US stock futures fall in cautious start to 2025

Investing.com– U.S. stock index futures rose on Wednesday evening, marking a cautious start to 2025 after a mix of artificial intelligence hype and lower interest rates saw equity markets log stellar gains in the past year. 

But these gains petered out towards the end of 2024, as a so-called “Santa Rally” largely failed to materialize in late-December. Concerns over a slower pace of interest rate cuts by the Federal Reserve and uncertainty over policy under incoming President Donald Trump saw investors lock in recent profits. 

fell 0.1% to 5,927.25 points, while fell 0.1% to 21,213.50 points by 19:13 ET (00:13 GMT). fell 0.2% to 42,809.0 points. 

Trading volumes remained thin on account of the year-end holidays, and are expected to only pick up in the coming week.

Sentiment was also rattled by a vehicle attack in New Orleans that killed at least 15, while a Tesla Inc (NASDAQ:) Cybertruck exploded outside the Trump Hotel in Las Vegas. 

Wall Street lags in final trading days of 2024

While Wall Street indexes were sitting on stellar gains through 2024, this momentum largely stalled in the final trading days of 2024, with benchmark indexes marking a flat-to-low performance in December. 

The closed down 0.4% at 5,881.60 points on Tuesday, while the fell 0.9% to 19,310.79 points. The fell 0.1% to 42,544.22 points, with all three indexes logging at least three days of consecutive losses. 

But they were still trading up substantially for 2024. The Nasdaq rose 28.6%, benefiting the most from an AI-fueled rally in technology stocks. The S&P 500 rose 23.3%, while the Dow added 12.9% in 2024. 

Trump policy, Fed rate cuts to take focus in 2025 

Trump’s economic and international policies are set to be the biggest point of focus in the coming month, as he takes office later in January. 

Trump has vowed to dole out largely expansionary policies, but has also pledged steep trade tariffs against major U.S. trading partners such as China, Canada, and Mexico. 

Uncertainty over Trump’s policies saw investors turn cautious in recent weeks, sparking some profit-taking after an initial rally on Wall Street in response to Trump’s election victory in early-November. 

Investors also fear that Trump’s policies could keep inflation elevated in the long-term, inviting fewer interest rate cuts by the Fed.

The central bank recently flagged a slower pace of rate cuts in 2025, citing concerns over sticky inflation and a robust labor market. 

The Fed’s comments had sparked an extended sell-off on Wall Street, and were a major driver of losses in December.