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U.S. stocks fell for a second straight session as investors booked strong gains for stock markets in 2024.
The broad S&P 500 fell 0.7 percent in afternoon trading in New York on Monday, while the tech-heavy Nasdaq Composite fell 0.8 percent. Stocks also pulled back sharply on Friday, with investors selling shares in big tech stocks that had posted big gains through most of 2024.
Monday’s selloff was broad, with about 90 percent of stocks trailing the S&P 500 down, according to FactSet data. Aerospace group Boeing fell 2 percent after a fatal crash of a 737-800 jetliner in South Korea at the weekend. American airlines also fell, with United Airlines sliding by almost the same margin.
Major technology companies, including chipmaker Broadcom, enterprise software group Oracle and computer maker Dell, as well as Elon Musk’s electric car maker Tesla, also fell as investors continued to pull away from some of the biggest gainers. of the year.
The S&P 500 is still up 24 percent in 2024 despite Monday’s pullback, with the Nasdaq up nearly 30 percent.
Thomas Lee, of research house Fundstrat, said the sell-off was the result of “profit-taking” as investors recalibrated portfolios at the end of a strong year for stocks. He noted that the Federal Reserve had also unnerved investors this month when it predicted just two quarterly rate cuts next year – half of its September estimate.
Torsten Sløk, chief economist at Apollo, echoed Lee’s sentiment, saying worries that interest rates would remain higher for longer than previously forecast had weighed on technology groups in particular, which had powered earnings. of this year on Wall Street.
The so-called Magnificent Seven stock market giants — Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia and Tesla — have accounted for about half of this year’s gains in the S&P 500, according to S&P Dow Jones Indices. All but Nvidia fell on Monday.
US investors bought government debt on Monday, sending the yield on the 10-year Treasury note down 0.06 percentage points to 4.56 percent. Fixed income yields move inversely to prices.
More than $26 billion flowed out of equity funds last week, including the biggest outflow in about two years from developed market equity funds, according to data provider EPFR. Investor withdrawals from cryptocurrency funds hit a record high as tech funds posted their longest run of outflows since early 2023.
Investors also put about $2.1 billion into bond funds and parked nearly $29 billion into low-risk money market funds, EPFR data showed.
Trading volumes are typically light during the last two weeks of the year as many on Wall Street and beyond are off work for the holiday season. The New York Stock Exchange will be open on New Year’s Eve, while bond markets will have a shortened trading day and both will be closed on New Year’s Day.
