Nasdaq, Dow Jones, and S&P 500: Stock Market’s Mixed Week Amid Tech Selloff
Dow Jones – On Friday, major stock indices saw declines, led primarily by technology stocks, but the broader market managed to post positive results for the holiday week. The Dow Jones Industrial Average fell 333.59 points, or 0.77%, to 42,992.21, marking its first drop in six sessions. Meanwhile, the S&P 500 dropped 1.11% to 5,970.84, and the Nasdaq Composite experienced a sharper decline, sliding 1.49% to 19,722.03. The Nasdaq was particularly impacted by significant losses in key tech stocks, including Tesla, which dropped around 5%, and Nvidia, which fell 2%.
Positive Holiday Week for Major Indexes
Despite the losses on Friday, major indexes posted positive results for the week, reflecting broader market resilience. The Dow managed to squeeze out a 0.4% gain for the week, breaking a three-week losing streak. The S&P 500 advanced 0.7% for the week, buoyed by a strong Christmas Eve performance, its best since 1974, according to Bespoke Investment Group. The Nasdaq, which was hit hardest by Friday’s downturn, slightly outperformed its peers with a nearly 0.8% gain for the week.
Treasury Yields Impact on Equities
A rise in Treasury yields this week may have contributed to the pressure on equities. The yield on the benchmark 10-year Treasury rose by more than 4 basis points on Friday, reaching 4.627%. This increase came after the yield hit its highest level since May during the previous session. Analysts note that this rise in yields could signal concerns about inflation or tightening monetary policies, which may have weighed on investor sentiment.
Alan Rechtschaffen, UBS Global Wealth senior portfolio manager, discussed the current market sentiment, stating that the decline in equities is a reflection of a lack of faith in the market. He pointed to concerns about tariffs and productivity as some of the primary issues currently driving investor unease.
Santa Claus Rally: Hopeful Outlook for the New Year
Despite the pressure on stocks at the end of the week, some investors remain hopeful that the market will gain momentum as the new year approaches, thanks to the so-called Santa Claus rally. This market phenomenon refers to the tendency for stocks to rise in the final five trading days of the year and the first two trading days of January. According to LPL Financial, the S&P 500 has posted an average return of 1.3% during this period since 1950, significantly outperforming the market’s typical seven-day return of 0.3%.
Todd Ahlsten, Chief Investment Officer at Parnassus Investments, shared an optimistic outlook, noting that the nation is experiencing a collective sense of relief after navigating a contentious election cycle and unusual market dynamics. He anticipates that the markets will broaden and improve in 2025 as confidence in the economic recovery strengthens.
Nasdaq’s Strong December Performance
Looking at the monthly performance, the Nasdaq is on track for a 2.6% advance in December, driven by a surge in Tesla and Alphabet shares, alongside a rally in Apple, which has brought the tech giant closer to a $4 trillion market cap. However, the S&P 500 is down by 1% for the month, and the Dow is on track to experience its worst monthly performance since April, with a loss of around 4.3%.
Conclusion: A Mixed Market Outlook
While Friday’s decline in major indices reflected some of the pressures facing equities, especially within the tech sector, the overall performance for the week remained positive. The rising Treasury yields, concerns about tariffs, and productivity issues have created a more cautious market environment. However, many investors are still holding onto the belief that the market will find strength through the traditional Santa Claus rally and into the early months of 2025.
- Dow Jones fell 333.59 points, or 0.77%, to 42,992.21.
- S&P 500 dropped 1.11% to 5,970.84.
- Nasdaq Composite slid 1.49% to 19,722.03.
- Tesla dropped around 5% and Nvidia fell 2%.
- Treasury yields rose to 4.627% on the 10-year note.
- The Nasdaq is up 2.6% for December, while the S&P 500 is down 1%.
The year-end performance suggests that volatility may continue into the new year, but the traditional Santa Claus rally could provide a glimmer of hope for market participants. Investors will be watching closely to see if the rally materializes and how Treasury yields impact market sentiment moving forward.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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