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U.S. stocks were down Friday afternoon but off session lows.
All 11 sectors of the S&P 500 are in the red, with the consumer discretionary and information technology sectors leading the loss, down 2% and 1.7%, respectively.
The Dow Jones Industrial Average fell 319.2 points, or 0.7% to about 43,009.
The S&P 500 dipped 68.3 points, or 1.1% to roughly 5,969.
The Nasdaq Composite fell 310 points, or 1.5% to about 19,712.
U.S. stocks are unlikely to see a Santa Claus rally this year, after the Federal Reserve officials earlier this month signaled fewer interest rate cuts in 2025 than they previously expected, according to José Torres, senior economist at Interactive Brokers.
The Santa rally speaks to a seasonal tendency for the S&P 500 to rise over the last five days trading days of a calendar year and the first two of the new year. The S&P 500 is down 0.6% since the close on Dec. 23, with this year’s Santa rally period starting on Dec. 24.
“To have a Santa Claus Rally, you would have needed Powell to be dovish at the Fed’s Dec. 18 meeting and to talk up rate cut expectations, but what he did was that he talked them down,” Torres said.
There’s a chance that there will be no rate cuts in 2025 at all, Torres said.
Traders are pricing a 15.5% likelihood that the Fed will keep its key policy rate unchanged next year at the current level of 4.25% to 4.5%, according to the CME FedWatch tool. That is up from 9.9% a month ago.
Meanwhile, tech stocks led the losses on Friday. Such stocks pulled back as “the exuberance around them was way too much” after Donald Trump won the U.S. election in early November, Torres said. Compared with their small-cap peers, large-cap tech companies are more likely to be hurt by Trump’s policies instead of benefiting from them, Torres said.
“In the short run, the big tech companies are going to get hurt because these are global companies that pay taxes all over the world, and have suppliers all over the world, so they’re gonna get hurt with trade tariffs, whereas the domestically oriented folks would benefit a lot more from lighter regulations and low taxes,” according to Torres.
U.S. stocks were taking it on the chin on Friday as major indexes like the S&P 500 and Nasdaq wiped out most of their gains from earlier in the week, leaving the “Santa Claus Rally” that began on Tuesday in jeopardy.
Sharp losses in shares of dominant Big Tech names like Tesla Inc., Nvidia Corp., Broadcom Inc., Microsoft Corp. and others.
Rising Treasury yields have been widely blamed for much of the stock-market weakness in December. But yields were relatively tame on Friday.
Burns McKinney, a portfolio manager at NFJ Investment Group, said the selling pressure on Friday was likely driven by year-end profit-taking.
Here is where indexes stood in recent trading:
The S&P 500 was off by 70 points, or 1.2%, at 5,967.
The Dow was off by 325 points, or 0.7%, at 43,001.
The Nasdaq Composite was off by 355 points, or 1.8%, at 19,663.
U.S. stocks opened lower on Friday, with the Dow down nearly 250 points following a five-day winning streak.
Despite the pullback, major U.S. equity indexes were still poised for a weekly gain during a holiday-shortened week with light trading volume.
Here is where stocks stood shortly after the opening bell:
The S&P 500 was off by 34 points, or 0.6%, at 6,002.
The Nasdaq Composite was down by 125 points, or 0.6%, at 19,893.
The Dow was off by 247 points, or 0.6%, at 43,073.
Oil prices were slightly higher on Friday as Israeli strikes against Yemen’s Houthi rebels triggered what one strategist described as a “fear bid” for the commodity.
West Texas Intermediate crude for February delivery gained 59 cents, or 0.9%, to $70.21 a barrel on the New York Mercantile Exchange.
February Brent crude the global benchmark, rose by 57 cents, or 0.8%, to $73.42 a barrel on ICE Futures Europe.
Back on Nymex, January gasoline rose to $1.958 a gallon, while January heating oil gained 1.2% to $2.230 a gallon.
January natural gas gained 3.4% to $3.840 per million British thermal units.
QuantumScape Corp shares increased 3% in Friday’s premarket session after Geode Capital Management upped its position in the battery maker.
Amedisys Inc shares rose 4% on news it has reached an agreement with UnitedHealth to extend the deadline for their $3.3 billion merger to Dec. 2025.
American Battery Technology Co shares jumped 18% after the battery materials maker struck a deal with two institutional investors to sell $10 million worth of its own shares.
reAlpha Tech Corp shares fell 10% after increasing in value by 195% over the past five days on excitement around the software company’s plans to invest in cryptocurrencies.
How are stock-index futures trading:
Dow Jones Industrial Average futures fell 120 points, or 0.27%, to 43,582
S&P 500 futures fell 19.5 points, or 0.32%, to 6,075
Nasdaq 100 futures fell 79 points, or 0.36%, to 21,929
On Thursday, the Dow Jones Industrial Average rose 29 points, or 0.07%, to 43,326, the S&P 500 declined 2 points, or 0.04%, to 6,038, and the Nasdaq Composite dropped 11 points, or 0.05%, to 20,020.
Stock-index futures fell on Friday after markets reopened yesterday from being closed for 1½ trading sessions for Christmas. Markets have now entered the ‘Santa Claus rally’ period in which the S&P 500 index has, on average, posted gains of 1.29% in the period running from Dec. 24 to Jan. 3 in the years since 1950.
The Dow Jones Industrial Average, Nasdaq 100, and S&P 500 indexes are currently all still on track to finish the Christmas week higher, even though stock futures were down on Friday morning, with investors expecting markets will remain relatively composed through to the end of 2024.
In terms of data, investors will be watching for new releases from the U.S. Census Bureau including its Nov. Advanced U.S. trade balance in goods, Advanced retail inventories, and Advanced wholesale inventories reports.
