2024 Market Collapse: What’s Next?

The final days of 2024 delivered a historically poor market performance for the S&P 500, according to Bespoke Investment Group, capping off an otherwise strong year on a sour note.

U.S. stocks began 2025 on shaky ground, with the S&P 500 SPX -0.22% dipping 0.2% on Thursday, the year’s first trading session. This followed a 2.6% decline from the close on Christmas Eve through the end of 2024—marking “the worst year-end performance since at least 1952,” according to a Bespoke note shared Thursday.

“December wasn’t a good month for bulls,” Bespoke noted, adding, “and the last several days were bad to a historic degree.”

Despite this rough finish, Bespoke emphasized that it doesn’t necessarily signal trouble for 2025. Historically, the S&P 500 has often rebounded following year-end declines exceeding 1%. January, in particular, has been a strong month for the index, with Renaissance Macro Research highlighting it as a historical standout in terms of average returns since 1928.

Investors are also keeping an eye on the “Santa Claus rally” window, which traditionally spans the final five trading days of the year and the first two of the new year. While the S&P 500 fell 1.6% during the last five sessions of 2024, the rally’s fate remains uncertain, with the period ending Friday.

On Thursday, broader U.S. markets mirrored the S&P 500’s retreat. The Nasdaq Composite COMP -0.16% declined 0.2%, while the Dow Jones Industrial Average DJIA -0.36% slipped 0.4%. Despite the late-year stumble, the S&P 500 ended 2024 up 23.3%, underscoring its overall strength during the year.