Markets stumble as Wall Street sells off Big Tech
CTV
U.S. stocks ended Friday in the red, closing out a lackluster week despite a year of historic highs.
U.S. stocks ended Friday in the red, closing out a lackluster week despite a year of historic highs.
The Dow was lower by 333 points, or 0.78 per cent, after the closing bell. The S&P 500 lost 1.1 per cent and the Nasdaq Composite was down by 1.5 per cent, after a selloff in Big Tech stocks. Shares of Tesla closed lower by around 5 per cent, while Amazon, Alphabet, Microsoft and Nvidia lost about 2 per cent.
The “Magnificent Seven” group of high-performing tech stocks — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — has accounted for more than half of the gains so far this year as they benefit from intense investor focus on ways to play the artificial intelligence boom, according to S&P Dow Jones Indices.
Analysts have long cautioned that the market’s reliance on a handful of names exposes the stock market to potential trouble, should the group stumble.
“If a few of these companies fail to beat an elevated bar for positive surprises, there is a risk they would also fall together,” said Keith Lerner, chief market strategist at Truist Wealth. “I would prefer a broader market, where mega cap growth stocks do well and other segments are also doing well. So if one area falters, another segment picks up the baton.”
Bitcoin’s tremendous late-year rally also fizzled, as traders looked to profit taking. The cryptocurrency had dropped to around US$94,000 by late afternoon on Friday after topping US$106,000 earlier this month on hopes that President-elect Donald Trump will usher in a crypto-friendly administration when he returns to the White House next month.
Treasury yields rose Friday, with the 10-year passing 4.6 per cent, potentially pushing some trading out of equities.
