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U.S. stocks fell sharply for a second straight session as investors profited from strong gains in 2024.
In early trading on Monday, the S&P 500 fell 1.6%, while the tech-heavy Nasdaq fell 1.8%. Stocks also pulled back sharply on Friday, with investors selling shares of Big Tech stocks that had rallied sharply for much of 2024.
Monday’s selling was broad, with all but four of the more than 500 stocks tracked by the S&P 500 falling, FactSet data showed. Aerospace group Boeing Co was one of the biggest laggards, with its shares falling 5% after a fatal crash of a 737-800 jet in South Korea over the weekend. American Airlines also fell, with United Airlines down 4%.
Big tech companies including chipmaker Broadcom, enterprise software group Oracle and PC maker Dell, as well as Elon Musk’s electric carmaker Tesla, come as investors continue to pull money from some of the year’s biggest gains. Stock prices also fell.
Despite Monday’s pullback, the S&P 500 is still on track to gain 23% in 2024 and the Nasdaq is up nearly 30%.
Thomas Lee of research firm Fundstrat said the sell-off was the result of “profit taking” as investors rebalanced their portfolios at the end of a strong year for stocks. He noted that the Fed also unnerved investors earlier this month when it forecast only two interest rate cuts next year, half of its September forecast.
U.S. investors bought government bonds on Monday, causing the 10-year Treasury yield to fall 0.07 percentage point to 4.55%. Fixed income yields are inversely related to price.
Data from data provider EPFR showed that equity fund outflows exceeded $26 billion last week, with the largest outflow from developed market equity funds in the past two years. Cryptocurrency funds saw investor withdrawals hit a record high, while technology funds posted their longest streak of outflows since early 2023.
Investors also poured about $2.1 billion into bond funds and nearly $29 billion into low-risk money market funds, EPFR data showed.
Trading volume is typically lower during the last two weeks of the year because many people on and off Wall Street are off work during the holiday period. The New York Stock Exchange will be open on New Year’s Eve, while the bond market will have a shortened trading day and be closed on New Year’s Day.
