Nasdaq 100 and S&P500: Profit-Taking and Crypto Drag US Stocks Lower Today

Stock Futures Dip as Profit-Taking and Crypto Weakness Halt Holiday Rally

Stock futures fell Thursday morning as investors locked in profits following strong gains earlier in the holiday-shortened week. Dow Jones Industrial Average futures slipped 144 points, while S&P 500 and Nasdaq 100 futures declined 0.32 and 0.34% respectively.

The downturn follows optimism tied to the seasonal Santa Claus rally, which had driven markets higher in the final trading days before Christmas. A pullback in cryptocurrency markets and rising jobless claims also pressured sentiment. Bitcoin’s slide weighed on stocks like MicroStrategy, Coinbase, and Riot Platforms, while light holiday trading volumes amplified the market’s sensitivity to negative news.

Will the Dow End Its Losing Streak This Week

Despite Thursday’s dip, the major indexes remain on track to finish the week in positive territory. The Nasdaq Composite is leading with a 2% gain, while the S&P 500 and Dow Jones Industrial Average have each advanced more than 1%.

If these gains hold through Friday, the Dow will snap a three-week losing streak – its longest since March. Historical trends suggest the rally could continue. Since 1950, the S&P 500 has averaged a 1.3% return during the Santa Claus period, significantly outperforming the typical seven-day return of 0.3%, according to LPL Research.

Which Stocks Are Driving Pre-Market Action?

Pre-market activity saw several notable movers:

• GameStop surged more than 4%, extending a four-day rally that has pushed the stock up 77% year-to-date.

• Crypto stocks slid as Bitcoin’s price decline rippled through the sector. MicroStrategy dropped 3%, Coinbase lost 2%, and Riot Platforms pulled back by more than 2%.
• Honda climbed 4%, fueled by merger talks with Nissan and a rally in Asian markets after Japan proposed a $735 billion budget. Honda’s U.S.-listed shares are up 14% this week.
• Starbucks edged down 0.4% as strikes spread to over 300 stores across 45 states.
• American Airlines slipped 0.6% after a system glitch grounded flights earlier in the week.

Is the Labor Market Softening as Jobless Claims Rise?

Fresh economic data showed initial jobless claims for the week ending December 21 totaled 219,000 – slightly below the forecasted 225,000. However, continuing claims increased to 1.91 million, reaching the highest level since November 2021.

The steady rise in continuing claims indicates more workers are struggling to find new jobs, suggesting a gradual softening of the labor market. Long-term unemployment has also been climbing. In November, 1.66 million people were unemployed for 27 weeks or longer – the highest since early 2021.

Is the Nasdaq Poised to Outperform the Dow in December?

Month to date, the Nasdaq Composite has jumped 4.2%, boosted by strong performances from Tesla, Apple, and Alphabet. Meanwhile, the S&P 500 is up just 0.1%. The Dow Jones, however, lags with a 3.6% decline, putting it on pace for its worst month since April.

Market Forecast: Will Profit-Taking Stall the Santa Claus Rally?

Thursday’s futures drop suggests some investors are cashing in on gains, but the broader market outlook remains cautiously optimistic. The Santa Claus rally could continue to drive equities higher into January, though rising continuing claims and profit-taking may introduce volatility.

With tech stocks outperforming and cyclicals showing resilience, the market leans bullish in the short term. Traders will watch for signs of further profit-taking as the final trading days of the year unfold.

More Information in our Economic Calendar.