U.S. stocks lost ground on the final trading day of a positive year that saw the benchmark hover around its all-time high this week on increasing anticipation that the Federal Reserve will reduce interest rates at the beginning of next year.
All three indexes were in the red early Friday afternoon, with the tech-heavy Nasdaq leading losses as megacap stocks fell.
Some analysts are worried about how stocks will fare through 2024 after stellar gains in the last few months of the year, fueled by hopes of a dovish Fed stance as inflation cools.
“Investors are expected to ease off early in the new year,” said Sam Stovall, chief investment strategist at CFRA Research.
Some market participants may seek to preempt the sale, which could take place in early 2024, Stovall added.
The S&P fell on Friday after coming within a whisker of its all-time high reached in January 2022 in the previous session. If it manages to finish above this level, it would confirm that the index has entered a bull market after reaching the close of the bear market in October 2022.
The three major indexes were on track for both monthly and quarterly advances, as well as double-digit gains in 2023.
The Dow Jones hit a record high on Thursday, while the Nasdaq outperformed its Wall Street rivals, rising 43% this year amid an artificial intelligence boom and a surge in mega-cap stocks.
According to CME’s FedWatch tool, the probability that policymakers will cut the Fed funds target rate by 25 basis points in March was nearly 74%.
2023 was marked by aggressive Fed rate hikes that were finally halted in September, the US banking crisis in March, the boom in AI stocks, the war between Israel and Hamas, and economic concerns that ultimately fueled the case for policy easing bets, among others. other.
Information technology, which is set to become the biggest sector gainer in 2023, trailed on Friday with losses of 0.5%.
Nvidia (NASDAQ) and Meta Platforms (NASDAQ), the S&P 500’s biggest annual gainers, fell 0.8% and 1.4%, respectively.
The small company index, which has risen sharply over the past two months, fell 1.3%.
Investors are pulling back for the holiday season. On Monday, January 1, the markets will be closed for the New Year.
At 12:08 p.m. ET, it was down 132.87 points, or 0.35%, at 37,577.23, the S&P 500 was down 24.42 points, or 0.51%, at 4,758.93 and down 112.61 points, 112, 61 points, 143, 19.9, 0.88
Corporate movers including Uber Technologies (NYSE) and Lyft (NASDAQ) lost 2.3% and 4%, respectively, following news that Nomura downgraded ride-sharing platforms.
Decliners outnumbered advancers 2.64 to 1 on the NYSE and 2.54 to 1 on the Nasdaq.
The S&P posted 30 new 52-week highs and no new lows, while the Nasdaq posted 58 new highs and 36 new lows.