(Reuters) – Technology and growth stocks pushed Wall Street’s main indexes lower on Friday, ending an upbeat holiday-shortened week driven by expectations of a traditionally strong period for markets.
The Dow Jones Industrial Average fell 0.82%, the S&P 500 fell 1.24%, and the Nasdaq Composite briefly fell more than 2% and was down 1.80%.
Ten of the 11 major S&P sectors, including information technology and consumer discretionary, fell the most, down about 2% and 1.9%, after consolidating most of the broader market’s gains in 2024.
comments:
Steve Sosnick, Chief Market Strategist, Interactive Brokers, Greenwich, Connecticut
“I’ve heard tales that pension funds are rebalancing before the end of the year, selling stocks and buying bonds. Unfortunately, I can’t verify that, but it might explain the sudden sell-off in the absence of news. And of course, if the big funds sell stocks en masse, Large technology stocks will bear the brunt due to their heavy weight in major indices.
“If nothing else, today is a reminder that just because a Santa Claus spike is a statistical possibility, it is far from guaranteed.”
“We have seen an attempt to buy higher on dips, which seems to confirm that this is some selling or rebalancing underway by a large investor.”
Jay Woods, Chief Global Strategist, Freedom Capital Markets, New York
“What people are doing is they’re raising some money. They’re getting some profits now as we get into the end of the year and they’re preparing for an opportunity if it presents itself at the beginning of next year. Technology, which has made tremendous progress, is starting to decline, and I think this is the beginning of a health correction that’s going to happen.” Focus on it over the next four to eight weeks as you switch departments.
Robert Pavlik, Senior Portfolio Manager, Dakota Wealth, Fairfield, Connecticut
“Any kind of selling pressure gets a little out of control when you have a market that’s thinly traded. And I think the selling pressure is really just people looking for direction.”
“It’s not a lot of institutions. I think a lot of non-professionals are looking to see the direction of the market and going with the flow. There are concerns that the first part of this year may involve some repositioning and reallocation of funds, and those who are trading today and next week will likely “They’re just trying to get ahead of it a little bit.”
“There’s uncertainty about the direction of interest rates and inflation, and the fact that it’s all coming together at once. What is the Fed going to do in the first part of next year?
“Then there is a new administration that comes in with new policies and (there are doubts about) what those policies will actually be, and what policies will actually be implemented. There is a lot of talk about new and many changes, but what will actually happen?”
“Because of the big progress we made in 2024, the portfolios are not quite positioned for 2025 and I think a lot of people are anticipating a lot of changes in the first part of the year.”
“You’re seeing some of that today and that will create more selling pressure because people just want to lock in gains before moving forward into 2025.”
Peter Toews, chief investment advisor at Chase, Charlottesville, Virginia
“These are the things that happen at the end of the year, people have had a very good year, and it’s typical end-of-year selling pressure caused by profit taking, there’s not a lot of buyers and there’s not a lot of volume.”
“(There’s) no reason to jump in and buy these things at these valuations, and tax planning is on people’s minds this week and will be on Monday and Tuesday. I don’t attribute that to any change in outlook on anything right now.
“The Santa Claus Parade is one of those historical statistics that are worth watching, but because of the change in administration and potential change in policy, you will likely see more action now than you normally would. There is potential for a lot of disruption in 2025.” .
Bryce Doty, Senior Portfolio Manager, SIT Fixed Income Advisors, Minneapolis
“Today the market was already reacting to the implications of upcoming taxes. Tax positioning overwhelms other factors. But the more out of touch the Fed seems (with economic realities), the worse it will be for stocks…tax trading will continue for the rest of the year.”
(Prepared by the breaking news team at Global Finance & Markets)