Wall Street’s week ended on a sour note Friday, with major indexes experiencing a broad sell-off that overshadowed gains earlier in the shortened holiday week. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all posted losses as investors took profits and adjusted portfolios ahead of the new year.
The Dow Jones Industrial Average fell 333.59 points, or 0.77%, to close at 42,992.21, ending a five-session winning streak that had followed its longest losing run since 1974. The S&P 500 dropped 66.75 points, or 1.11%, finishing at 5,970.84, while the Nasdaq Composite lost 298.33 points, or 1.49%, to end at 19,722.03.
Michael Reynolds, Vice President of Investment Strategy at Glenmede, attributed the losses to profit-taking, stating, “We are more than two years into a strong bull market, so it’s not surprising to see some people rebalancing portfolios.” The decline also interrupted the anticipated “Santa Claus rally,” a seasonal trend where stocks typically rise in the final five sessions of December and the first two sessions of January.
The market was further pressured by rising U.S. Treasury yields, with the benchmark 10-year yield hovering near a seven-month high of 4.63%. Higher yields increase borrowing costs, posing challenges for growth stocks, particularly the “Magnificent Seven” tech giants that have driven much of 2024’s market rally.
Tesla led the group’s declines for a second consecutive day, dropping 5%, while Nvidia, Alphabet, Amazon, and Microsoft all shed over 1.5%. Glenmede’s Reynolds noted that rising rates prompted investors to reassess valuations on these high-growth stocks, potentially seeking better opportunities elsewhere.
All 11 major S&P sectors recorded losses, with the hardest-hit being 2024’s leading sectors—consumer discretionary, information technology, and communication services—which fell between 1.1% and 1.9%.
Despite Friday’s pullback, the major indexes posted weekly gains. The S&P 500 rose 0.7%, the Nasdaq gained 0.75%, and the Dow added 0.36% for the week.
Some stocks bucked the trend. Amedisys surged 4.7% after extending the deadline for its $3.3 billion merger with UnitedHealth, while Lamb Weston climbed 2.6% following activist investor Jana Partners’ push for board changes.
Trading volumes remained below the six-month average due to the holiday-shortened week and are expected to stay subdued until January 6. Investors now shift their focus to the December employment report, scheduled for release on January 10.