US stocks fall in broad retreat as investors cash in gains in 2024

On By Littum

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U.S. stocks fell sharply for the second straight trading session as investors cashed in on strong gains in 2024 equity markets.

The broad S&P 500 fell 1.6 per cent. in trading on Monday morning, while the technology-heavy Nasdaq Composite fell 1.8 per cent. Stocks had also retreated significantly on Friday, with investors selling shares in major technology stocks that have posted big gains through most of 2024.

Monday’s selloff was broad, with all but four of the more than 500 stocks tracked by the S&P 500 falling, according to FactSet data. Aviation group Boeing was one of the biggest laggards, falling 5 percent after a fatal crash of a 737-800 jet in South Korea over the weekend. American airlines also fell, with United Airlines falling 4 percent.

Major technology companies, including chip maker Broadcom, enterprise software group Oracle and PC maker Dell, as well as Elon Musk’s electric car maker Tesla, also fell as investors continued to move away from some of the year’s biggest winners.

The S&P 500 is still up 23 percent in 2024 despite Monday’s pullback, with the Nasdaq up nearly 30 percent.

Thomas Lee, of research house Fundstrat, said the selling spree was the result of “profit-taking” as investors recalibrated portfolios at the end of a strong year for stocks. He noted that the Federal Reserve had also unsettled investors earlier this month when it predicted just two quarter-point rate cuts next year – half the September estimate.

US investors bought up government debt on Monday, sending the yield on the 10-year Treasury note down 0.07 percentage points to 4.55 per cent. Interest rates on fixed income move inversely to prices.

More than $26 billion flowed out of equity funds last week, including the biggest outflow in about two years from developed equity funds, according to data provider EPFR. Investor withdrawals from cryptocurrency funds hit a record high, while technology funds marked their longest streak of outflows since early 2023.

Investors also put in about $2.1 billion. in bond funds and parked nearly $29 billion. in low-risk money market funds, EPFR data showed.

Trading volume is typically low during the last two weeks of the year, as many on and off Wall Street step away from work for the holiday season. The New York Stock Exchange will be open on New Year’s Eve, while the bond markets will have a shortened trading day and both will be closed on New Year’s Day.