US equity markets experienced a pullback on Monday, December 29, closing a holiday-shortened session in negative territory. The decline was broad-based, interrupting a recent rally as investors engaged in year-end profit-taking. Simultaneously, gold prices tumbled sharply from their record peaks.
Broad Market Sell-Off Weighs on Major Indexes
The three major US stock benchmarks all ended the day lower. The Dow Jones Industrial Average dropped 249.04 points, or 0.51%, to settle at 48,461.93. The S&P 500 index declined by 24.19 points, or 0.35%, finishing at 6,905.75. The technology-heavy Nasdaq Composite fell 118.75 points, or 0.50%, closing at 23,474.35.
Rob Haworth, a senior investment strategist at U.S. Bank Wealth Management in Seattle, noted the shift in sentiment. "In light volume trading, we’re seeing a reversal of what we saw over the last couple of days," he said. "The broader market is looking at the strength of last week and selling off as we head into year-end."
Geopolitical Tensions and Commodity Movements
Market participants were also monitoring geopolitical developments. Hopes for a potential deal to end the Russia-Ukraine war, following talks between US President Donald Trump and Ukrainian President Volodymyr Zelenskiy, faced a setback. Russia accused Ukraine of attempting to attack President Vladimir Putin's residence, creating a potential roadblock to negotiations.
This development contributed to a jump in oil prices due to concerns over potential supply disruptions. US crude oil rose 2.36% to settle at $58.14 per barrel, while Brent crude gained to $61.94 per barrel.
In a sharp reversal, precious metals sold off significantly. Spot gold prices plunged 4.47% to $4,329.65 an ounce, retreating from its all-time high. US gold futures also fell sharply, dropping 3.31% to $4,379.00 an ounce.
Bond Yields and Global Market Performance
US Treasury yields edged lower as investors continued to adjust their expectations for interest rate cuts by the Federal Reserve in the coming year. The yield on the benchmark 10-year Treasury note fell 2.8 basis points to 4.106%. The 30-year bond yield declined to 4.7938%, and the 2-year note yield, sensitive to Fed policy expectations, fell to 3.457%.
Globally, market performance was mixed. European stocks, led by technology and consumer-focused shares, managed to hit new record highs. The pan-European STOXX 600 index rose 0.09%. In Asia, Japan's Nikkei index fell 0.44%, while MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.32% higher.
Despite the day's losses, US and global stocks remain on track to finish 2025 near record highs, having posted double-digit gains in a year marked by tariff wars, central bank policy shifts, and geopolitical tensions. Haworth reflected on the market's resilience: "When we started the year, we saw tariffs get implemented and the question was ‘will the market survive?’ The answer was yes." He added that broadening participation could give the rally more room to continue into a potential fourth year of gains.
