Broadcom, Micron Technology and SoundHound AI fall, while the Dow sheds 250 points

On By Littum

All major market indices fell today led by Dow Jones Industrial Averagewhich at one point this morning was down 600 points, although it has since recouped some of those losses. The broader benchmark S&P 500 and Nasdaq Composite also fell this morning, but had recouped some of those losses and was trading less than 1% down as of 12:04 PM ET today.

The sale was broadly based, including technology and artificial intelligence (AI) shares. The shares of the chipmakers Broadcom (NASDAQ: AVGO) and Micron technology (NASDAQ: MU) both fell by 2.7 per cent. Shares in the voice recognition company SoundHound AI (NASDAQ: SOUN) had fallen by around 6 per cent.

There was no apparent reason for the sharp sell-off this morning. Treasury yields fell, good for the market, after they topped 4.6% in recent days, the highest level since mid-year. Trading volume is low today, which is normal for the last week of the year because more investors are off or on vacation, so I wouldn’t read too much into the action last week or this week.

Investors have been bearish since the Federal Reserve ended its last meeting of the year on Dec. 18, delivering a more hawkish message to the market that said the agency would proceed with rate cuts cautiously. Inflation remains above the Fed’s preferred target of 2% and the labor market still looks strong by many accounts. Furthermore, some fear that President-elect Donald Trump’s potential policy proposals involving tax cuts and tariffs could reignite inflation in 2025.

Tom Lee, head of research at Fundstrat, told CNBC this morning that he’s not too worried about today and sees further tailwinds ahead in 2025, including a pro-business Trump administration and signs of slowing inflation. He believes 7,000 is in the cards for the S&P 500 in the first half of next year.

“It’s not a fluid environment because we’re in the last two days of the year,” he said. “Strangely enough, if the last week of December is weak, I actually think it bodes well for a rebound in the first week of January.”

However, not everyone is equally positive. Jeremy Siegel, professor emeritus of finance at the University of Pennsylvania’s Wharton School also went on CNBC this morning and said he is more cautious about the market. He believes the probability of a 10% market correction in 2025 has increased.

“I think we have challenges next year because of all the optimism built into this year,” Siegel said, acknowledging that the AI ​​narrative remains strong. “We still have a two-tier market in the sense that Mag 7 is … 30-35 times earnings and the rest of the market is 18-20, which is much more reasonable. I think 2025 could be switch.”