US Market On December 31: Is Trading Open On Tuesday? 2025 Outlook Promising For DJIA, S&P 500, Nasdaq

The US market reacted in an extreme bearish trend on December 30th, ahead of New Year's Eve. With many countries declaring New Year's Eve as a national or public holiday, does the same apply in the largest economy of the world? Is December 31st a federal holiday, and whether stock exchanges NYSE and Nasdaq are opened for trading on Tuesday? The start of the week has been in deep red for Wall Street, however, the new year looks promising.

Ahead of New Year's Eve, Dow Jones ended at 42,573.73 down by 0.97%, while S&P 500 slipped by 1.07% to close at 5,906.94. Further, Nasdaq Composite stood at 19,486.78 lower by 1.19%.

Meanwhile, in the early hours of Tuesday, US stock futures traded in red.

As per Trading Economics data, US stock futures were mainly lower on the final day of 2024 following a third straight decline in Wall Street's S&P 500 and Nasdaq Monday, as holiday volatility weighed on markets amid continued losses in tech stocks. Meanwhile, trading activity is expected to remain subdued due to the shortened holiday week. Despite this, the S&P 500 is on track to log a remarkable gain of around 27% throughout the year, boosted by several factors including anticipated interest rate cuts, strong corporate earnings, and significant investments in artificial intelligence (AI). Companies like Palantir Technologies and Nvidia led the charge with triple-digit gains.

In the year so far, the data highlighted that Dow Jones also performed well, climbing around 14.4% for this year, supported by positive US economic data, robust consumer spending, and improvements in global trade relations. The Nasdaq Composite outperformed both, with an impressive 34% surge.

US Stock Market Open Or Closed On New Year's Eve?

The New Year's Eve which is December 31st is not a public or national holiday in the United States of America. Hence, both US federal and US market are operational as usual on Tuesday. However, bond market will have half-day for trading.

2025 US Market Outlook:

Leading investment services provider, Charles Schwab in its note said, "The U.S. stock market generally did well in 2024 and may continue strong in 2025. However, we expect to see gear shifts and increased market volatility as potential policies from the incoming Trump administration combine with uncertainty about inflation and global economic strength."

Charles Schwab's report highlighted that although the stocks in the S&P 500 index are expensive by historical standards,1 current market momentum and breadth-that is, how many stocks are advancing vs. declining- tend to bode well for returns over the next 12 months. As of December 9, 2024, the S&P 500 was up nearly 27% year-to-date, and up 31.46% on a trailing-12-month basis. During the past seven decades, there have been only two bull market peaks (when an extended rally ends) that occurred when the trailing one-year gain in the S&P 500 was above 30%. But most historical studies do point to heightened risk of volatility spikes and periodic drawdowns, which is why investor discipline is warranted.

For now, the labor market remains healthy. The rise in the unemployment rate from 3.4% at the start of 2023 to its current 4.2% was largely a function of a significant increase in the labor force due to immigration-not due to layoffs. Assuming immigration falls and deportations pick up alongside a slowing in the labor force, the downward pressure on wage growth could reverse. That, plus a lower sustainable rate of payroll growth could put the Federal Reserve in a bit of a pickle trying to adjust policy to that downshift, especially if inflation heats up, as per Charles Schwab.

However, the broker points out other uncertainties such as immigration policy. It added, slower immigration coupled with mass deportations will lead to a downshift in labor force growth and labor supply-also likely denting the economic demand side of that equation.

That is why, Charles Schwab expects gears to shift as potential policy changes under the Trump administration add to uncertainty about inflation and the global economy.

But the good news is that past two decades have brought more sustainable and resilient growth in the domestic economy, and more self-sufficiency in terms of food and energy production, lessening the reliance on trade. This has led to higher returns on U.S. capital and in turn ample capital inflows alongside a strong U.S. dollar, it added.

The brokerage suggested. "We continue to recommend staying up in quality, looking for stocks of companies with factors like improving profit, balance-sheet strength, ample interest coverage ratios (which measure a company's ability to pay interest on its debt) and healthy free cash flow."