Stocks fall in weak year-end trading on tax selling and profit-taking

(Reuters) – Technology and growth stocks pushed major Wall Street indexes lower on Friday, at the end of a positive, holiday-shortened week driven by expectations of a traditionally strong market period.

The Dow Jones Industrial Average fell 0.82%, the S&P 500 lost 1.24% and the Nasdaq Composite briefly fell more than 2%, losing 1.80%.

Ten of the 11 major S&P sectors, including information technology and consumer discretionary, fell the most, falling about 2% and 1.9%, respectively, after accounting for most of the broader market’s gains in 2024.

COMMENTS:

STEVE SOSNICK, CHIEF MARKET STRATEGIST, INTERACTIVE BROKERS, GREENWICH, CONNECTICUT

“I’ve heard anecdotes that pension funds are rebalancing before the end of the year by selling stocks and buying bonds. Unfortunately I can’t verify this, but it would explain the sudden sell-off with no news. And of course, if…” “Large funds are selling stocks en masse, the megacap tech stocks would bear the brunt due to their heavy weighting in major indices.”

“If nothing else, today is a reminder that just because a ‘Santa Claus’ rally is a statistical probability, it is far from guaranteed.”

“We have seen an attempt at a buy-the-dip rally beaten back, which seems to confirm that this is a sale or rebalancing by a large investor.”

JAY WOODS, CHIEF GLOBAL STRATEGIST, FREEDOM CAPITAL MARKETS, NEW YORK

“What people are doing is raising some money. They are taking some profits now as we approach the end of the year and preparing for an opportunity when it presents itself early next year. Tech, this has had a tremendous run and is starting to pull back. I think this is the beginning of a healthy correction that will be concentrated over the next four to eight weeks as we change administrations.

ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER, DAKOTA WEALTH, FAIRFIELD, CONNECTICUT

“Any kind of selling pressure gets a little out of control when the market is barely trading. And I think the pressure to sell is really just people looking for direction.”

“There are not many institutions. I think many laypeople recognize the direction of the market and just go with the flow. There is a fear that there may be some repositioning and reallocation of funds in the first part of this year and those trading today and next week are probably just trying to get a little ahead of that.”

“There is uncertainty about the direction of interest rates and inflation, and the fact that all of this is somehow coming together at once. What will the Federal Reserve do in the first half of next year?”

The story continues