The stock market stumbled on Friday as Wall Street sold off big tech stocks, capping off a lackluster week.
We are about to have more years, since 1950, that saw stocks gain 20% (22) than had a negative year (21).
Impress your friends at the New Year's Eve party with that stat. pic.twitter.com/LDn0m6uBf6
— Ryan Detrick, CMT (@RyanDetrick) December 26, 2024
The Dow Jones Industrial Average closed down by 333 points, or 0.78%, while the S&P 500 shed 1.1% and the Nasdaq Composite dropped 1.5%. Shares of major tech companies, including Tesla, Amazon, Alphabet, Microsoft, and Nvidia, all recorded losses.
Tesla alone saw a roughly 5% decline.
The S&P 500 gained more than 1% on the first day of the Santa Claus Rally (SCR).
Now what?
Full SCR period has never been lower, up 7 out of 7.
Final 6 days? Higher 5 of 7, with two small losses and up 1.7% on avg.
— Ryan Detrick, CMT (@RyanDetrick) December 26, 2024
These high-performing tech stocks have largely propelled the market’s gains this year, benefiting from investor interest in artificial intelligence opportunities. Keith Lerner, chief market strategist at Truist Wealth, commented on the risks associated with this concentrated market focus.
Stock market outlook: Auto sales data, record dates – Top cues to watch in New Year’s first weekhttps://t.co/jiQK3yvrZl
— ET NOW (@ETNOWlive) December 29, 2024
“If a few of these companies fail to meet expectations, it could lead to a broader market downturn,” he noted. The market turbulence extended to cryptocurrencies, with Bitcoin experiencing a sharp decline to around $19,000. This followed a recent peak of $21,000 earlier in the month.
Tech stocks lead market downturn
The drop was largely attributed to profit-taking by traders. Treasury yields also rose on Friday, with the 10-year yield surpassing 4.6%, which could drive some investment away from equities.
The holiday-shortened trading week resulted in lower trading volumes, amplifying market volatility. FactSet analysts indicated that the market fluctuations were not driven by any significant news, underscoring the impact of seasonal trading patterns around the holidays. Last year saw similar volatility in late December, with dramatic market moves occurring despite the absence of major developments.
Looking ahead, stocks are poised to outperform bonds even after a strong performance over the past two years, according to Anthony Valeri, investment management director at California Bank & Trust. “Investors should maintain their equity exposure into the New Year. Stocks remain the best investment to protect against inflation,” Valeri advised.
Overall, the market’s recent behavior reflects the typical end-of-year trading environment, marked by thin volumes and heightened volatility as investors reallocate their portfolios.
