Tech decline drags Wall Street stocks lower

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Shares of US technology companies fell on Friday as investors moved away from the companies that led the markets higher during most of this year.

The S&P 500, Wall Street’s main stock index, fell 1.6 percent in afternoon trading on Friday, while the Nasdaq, which was dominated by technology stocks, fell 2.2 percent. Electric car maker Tesla, owned by Elon Musk, was among the largest laggards, falling by 4.4 percent, while chip maker Nvidia fell by about 3 percent.

Technology stocks have risen strongly this year, with investors betting artificial intelligence That would increase demand for everything from servers to microchips. The gains accelerated after Donald Trump won the presidential election in November thanks to bets that the president-elect would initiate more business-friendly policies when his term begins next month.

However, the sector has been more volatile in recent weeks as investors reevaluate their best-performing year-end holdings. The Fed also sparked turmoil last week when it forecast just two quarter-point rate cuts next year, compared to its September forecast of four cuts. High interest rates typically distort the attractiveness of holding shares in fast-growing companies.

Citigroup analysts said Friday that while they still expect the S&P 500 to rise about 10 percent from current levels by the end of next year, they expect “a more volatile phase of the bull market ahead.”

The US bank indicated that the gains achieved this year in stock prices compared to corporate profits “set a high ceiling for fundamentals next year, and even in the year after.”

The S&P 500 is still up about 25 percent year-to-date even after Friday’s decline, roughly matching the previous year’s gains.

Standard & Poor’s Dow Jones’ Howard Silverblatt said the so-called “magnificent seven” big tech stocks — Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia and Tesla — were responsible for nearly half of the S&P 500’s total returns, including… That’s dividends, this year. Indicators.

Magnificent 7 shares were all down on Friday, with Apple, Microsoft, Amazon and Meta all down at least 2 percent each. Trading activity is typically lighter than usual during the holidays, which can exacerbate volatility.