Stocks Get Hit by Selloff in Technology Giants: Markets Wrap

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Stocks Get Hit by Selloff in Technology Giants: Markets Wrap


(Bloomberg) — A selloff in the world’s largest technology companies hit stocks in the final stretch of a stellar year.

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In another session of slim trading volume — which tends to amplify moves — the S&P 500 lost 1.6% and the Nasdaq 100 slipped 2%. Every major industry fell, with Tesla Inc. and Nvidia Corp. leading losses in megacaps. That’s after a surge that saw the cohort of tech giants dubbed “Magnificent Seven” account for more than half of the US equity benchmark’s performance in 2024.

“I think Santa has already come, but that’s me. Have you seen the performance this year?” said Kenny Polcari at SlateStone Wealth. “It’s Friday, next week is another holiday-shortened week, volumes will be light, moves will be exaggerated. Don’t make any major investing decisions this week.”

To Tom Essaye at The Sevens Report, sentiment is no longer euphoric and markets will start the year with regular investors much more balanced in their outlook — and that would be a “good thing as it reduces air pocket risk,” but advisors have largely ignored the recent volatility.

“It’s fair to say that this recent dip in stocks has taken the euphoria out of individual investors, but it has not dented advisors’ sentiment,” he said. “And if we get bad political news or Fed officials pointing towards a ‘pause’ in rate cuts, that likely will cause more short, sharp drops.”

The S&P 500 and the Nasdaq 100 almost wiped out this week’s gains. The Dow Jones Industrial Average slipped 1.2%. A Bloomberg gauge of the “Magnificent Seven” shares sank 2.7%. The Russell 2000 index of small caps dropped 2.2%.

The yield on 10-year Treasuries advanced two basis points to 4.61%. The Bloomberg Dollar Spot Index wavered.

Funds tied to several of the major themes that have driven markets and fund flows over the past three years stumbled during the week ending Dec. 25, according to data compiled by EPFR.

Redemptions from cryptocurrency funds hit a record high while technology sector funds extended their longest outflow streak since the first week of 2023, the firm said.

This year’s rally in US equities has driven the expectations for stocks so high that it may turn out to be the biggest hurdle for further gains in the new year. And the bar is even higher for tech stocks, given their massive rally this year.

A Bloomberg Intelligence analysis recently found that analysts estimate a nearly 30% earnings growth for the sector next year, but tech’s market-cap share of the S&P 500 index implies closer to 40% growth expectations may be embedded in the stocks.



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