The Magnificent Seven Face Turbulence On Wall Street
Date
12/30/2024 5:00:31 AM
(MENAFN- The Rio Times) The stock market's darlings stumbled on Friday. Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia, and Tesla saw their shares drop. These tech giants, dubbed the "Magnificent Seven," drove half of the S&P 500's returns in 2024.
Apple, Microsoft, Amazon, and Meta each fell over 1%. The holiday season's low trading volume amplified market swings. Tech Stocks soared earlier this year as investors bet on AI-driven demand for servers and chips.
Donald Trump's November election victory boosted the sector. Investors expected business-friendly policies from the president-elect. However, recent weeks brought volatility as investors reassessed their top performers.
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The Federal Reserve's forecast of fewer interest rate cuts in 2025 rattled markets. This shift raised concerns about inflation staying above the 2% target. Long-term borrowing costs in the US increased as a result.
The 10-year Treasury yield climbed to 4.61% on Friday, up from September's 3.6% low. Higher yields typically reduce the appeal of fast-growing company stocks. Citigroup analysts predict a more volatile bull market ahead.
The Magnificent Seven Face Turbulence on Wall Street
The S&P 500 trades at 22.2 times expected earnings, above the decade's 18.1 average. This high valuation sets a challenging bar for future corporate performance. Despite Friday's dip, the S&P 500 remains up 25% for the year.
The S&P 500 closed down 1.11% on Friday. The tech-heavy Nasdaq Composite fell 1.49%. Elon Musk's electric car maker Tesla dropped 4.95%, while chipmaker Nvidia declined over 2%.
Market volatility persists as investors navigate economic uncertainties. The tech sector's dominance faces scrutiny amid changing monetary policies and valuation concerns. As 2024 ends, Wall Street braces for potential shifts in market leadership.
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