Wall Street's Christmas holiday cheer came to an abrupt end on Friday, with all three major indexes falling in a widespread sell-off that hit even the tech and growth stocks that had driven the market higher through much of the shortened trading week. Finished the transaction.
The Dow Jones Industrial Average fell 333.59 points, or 0.8%, to $42,992.21. The blue-chip index had fallen more than 500 points early Friday. The S&P 500 index fell 1.1%, and the Nasdaq index also fell nearly 300 points, or 1.1%.
Despite Friday's struggles, all three indexes ended the week with gains.
The drop in stocks disrupted the seasonal Santa Claus rally, which traditionally sees stocks rise during the last five sessions of December and the first two sessions of January. Since 1969, the S&P 500 index has risen an average of 1.3%, according to the Stock Traders Almanac.
“At least today is a reminder that just because a Santa Claus rally is statistically possible doesn't mean it's guaranteed,” said Steve Sosnick, chief market strategist at Interactive Brokers. said.
Thursday's trading suggested momentum was stalling, with both the S&P 500 and Nasdaq posting modest losses, ending a multi-session winning streak.
Rising U.S. Treasury yields have caught the attention of investors, with the benchmark 10-year Treasury note hitting its highest in more than seven months in the previous session. The yield was hovering around that level at 4.61% on Friday.
Rising yields are expected to hinder the growth of growth stocks by raising the cost of borrowing money for business expansion. Those stocks, especially the so-called Magnificent Seven tech megacap stocks that were a major driver of the market's rally in 2024, were also caught up in Friday's decline.
Tesla led the group's decline for the second day in a row, dropping 5%. Amazon, Microsoft and Nvidia also fell more than 1%.
All 11 major S&P sectors fell. The three worst performing indexes on Friday were the three leading 2024 indexes: consumer goods, information technology and communications services.
“The technology industry, which has performed phenomenally so far, is starting to pull back. This is the beginning of a healthy adjustment that will come into focus over the next four to eight weeks as the administration changes,” Freedom said. said Jay Woods, chief global strategist at Capital Markets.
The news event caused some stocks to bounce back from the market decline.
Amedisys rose 4.7% after home health care provider and insurer UnitedHealth extended the deadline to close its $3.3 billion merger.
Lamb Weston rose 2.8% after a filing revealed that activist investor Jana Partners is working with a sixth executive to push for reforms at the french fry maker. This could result in the majority of the board being replaced.
Volume this holiday-shortened week was below the average for the past six months and is expected to remain weak through January 6. The next big focus for the market will be the December employment report, which will be released on January 10th.
