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U.S. stocks fell for a second straight trading session as investors cashed in on strong gains for equity markets in 2024.
The broader S&P 500 fell 1.1 percent in morning trading Monday in New York, while the tech-heavy Nasdaq Composite fell 1.2 percent. Stocks also rebounded significantly on Friday, with investors selling shares in big tech stocks that have posted big gains through most of 2024.
All but 20 of the more than 500 stocks tracked by the S&P 500 had a sell-off on Monday, according to FactSet data. Aerospace group Boeing was one of the biggest laggards, dropping 2 percent after the fatal crash of a 737-800 jet in South Korea over the weekend. US Airlines also fell, with United Airlines slipping by about the same margin.
Big tech companies including chipmaker Broadcom, enterprise software group Oracle and PC maker Dell, as well as Elon Musk’s electric-car maker Tesla, also fell as investors turned away from the year’s biggest gainers.
Despite Monday’s pullback, the S&P 500 is still up 24 percent in 2024, 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 restructured portfolios at the end of a strong year. Equity. He noted that the Federal Reserve also upset investors this month when it forecast a rate cut of just two quarter-points next year — half of its September estimate.
Torsten Slok, chief economist at Apollo, echoed Lee’s sentiments, saying concerns that interest rates will remain higher than previously expected have weighed heavily on technology groups in particular, which has fueled this year’s gains on Wall Street.
The so-called Magnificent Seven stock market behemoths — Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia and Tesla — have driven nearly half of this year’s gains in the S&P 500, according to the 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 0.07 percentage points to 4.55 percent. Fixed income yields move inversely with prices.
More than $26 billion flowed out of equity funds last week, including the largest outflow in nearly two years from developed market stock funds, according to data provider EPFR. Investor withdrawals from cryptocurrency funds hit record highs while tech funds marked their longest outflow since early 2023.
Investors parked about $2.1 billion in bond funds and about $29 billion in low-risk money market funds, EPFR data showed.
Trading volume is typically light during the last two weeks of the year as many on and off Wall Street are off work during the holiday season. The New York Stock Exchange will be open on New Year’s Eve while the bond market will have a short trading day and both will be closed on New Year’s Day.
