Dow collapses as end-of-year Santa rally fails to ignite

Technology and growth stocks dragged Wall Street’s main indexes lower Friday, at the end of an optimistic holiday-shortened week driven by expectations around a traditionally strong period for markets.

At midday, the Dow Jones Industrial Average plunged 528 points, or 1.2%, to 42,796. The S&P 500 lost 1.7% and the Nasdaq fell more than 450 points, or 2.3%.

All three indexes are still poised for weekly gains, with the benchmark now about 2.3% below its all-time high of 6,099.97 points reached on December 6.

The blue-chip Dow Jones fell more than 500 points, or 1.2%, on Friday. Getty Images

Yields on some U.S. Treasuries were higher on the day, with yields on the benchmark 10-year security hovering near a more than seven-month high they hit Thursday. Yields on the benchmark 10-year bond were last at 4.587%.

Rate-sensitive growth stocks fell, with Nvidia down 3% and Tesla down 3.8%, while Microsoft lost 2%.

Ten of the S&P’s 11 major sectors, including information technology and consumer discretionary, fell the most, down about 2% and 1.9%, after generating the bulk of the S&P’s gains. market as a whole in 2024.

“Technology, which has experienced tremendous growth, is starting to decline. This is the start of a healthy correction that we will focus on over the next four to eight weeks as we change administrations,” said Jay Woods, chief global strategist at Freedom Capital Markets.

With three sessions remaining to close out the year, markets are in the stock-buying season known as the “Santa Rally” – the last five sessions of December and the first two of January.

All three indexes are still expected to see weekly gains as the Santa Claus rally begins. REUTERS

Since 1969, the S&P 500 has climbed 1.3% on average over a seven-day trading period, according to the Stock Trader’s Almanac.

U.S. stocks broadly extended gains since a bumper November, when Donald Trump won the presidential election, as hopes for business-friendly policies under the new administration fueled optimism.

Trading volumes during the holiday-shortened week were below the six-month average and are expected to remain subdued through January 6. The next major market focus will be the December jobs report, due January 10.

Among individual movers, Amedisys gained 4% after the home health provider and insurer UnitedHealth extended the deadline to close their $3.3 billion merger.