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US technology stocks fell on Friday as investors pulled out of companies that have led the market this year.
The IS&P 500, Wall Street's equity benchmark, fell 1.2 percent in afternoon trading Friday, while the tech-heavy Nasdaq fell 1.7 percent. Elon Musk's electric car maker Tesla was among the biggest laggards, fell 4.8 percent, while the chipmaker Nvidia down more than 2 percent.
Tech stocks have rallied strongly this year, as investors bet artificial intelligence It can run a claim for everything from servers to microchips. Profits sped up after Donald Trump's victory in November on bets that the president-elect will introduce pro-business policies when his term begins next month.
However, the sector has become more active in recent weeks as investors reassess their holdings for year-end performance. The Federal Reserve also raised ructions last week when it predicted a rate cut of only two quarters next year, compared to the forecast of September four.
Hawkish forecasts have pushed up long-term US borrowing costs, with the 10-year Treasury yield up to 4.61 percent on Friday, compared to September lows of around 3.6 percent. High valuations tend to tarnish the appeal of holding shares in fast-growing companies.
Citigroup analysts on Friday said that while they still predict the S & P 500 will rise about 10 percent from current levels by the end of next year, they expect a “volatile leg of the bull market”.
The US bank noted this year's gains in stock prices compared to corporate earnings “set the tone for the fundamentals next year, and the year after”. The S&P 500 trades at about 22.2 times expected earnings over the next year, compared with the past decade's average of 18.1, according to FactSet data.
The S&P 500 is still up about 25 percent for the year to date and after Friday's pullback, relative to last year's level of gains.
The so-called Magnificent 7 Big Tech stocks — Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia and Tesla — are responsible for about half of the S&P 500's total return, including dividends. this year, said Howard Silverblatt at S&P Dow Jones. Indicators.
All Magnificent 7 shares declined on Friday, however, with Apple, Microsoft, Amazon and Meta down at least one percent.
Trading activity is typically lighter than usual during the holidays, which can increase volatility.