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US stocks fell sharply in a flat trading session as investors took advantage of strong gains in equity markets in 2024.
The broader IS&P 500 fell 1.6 percent in morning trading Monday, while the tech-heavy Nasdaq Composite fell 1.8 percent. Stocks retreated sharply on Friday, with investors selling shares in the biggest technology stocks that have posted the biggest gains in the entire 2024 period.
Monday's sell-off was broad, with all but four of the top 500 stocks trailing the S&P 500 falling, according to FactSet data. Aerospace group Boeing was one of the biggest losers, falling 5 percent after the fatal crash of a 737-800 jet in South Korea over the weekend. US airlines also fell, with United Airlines slipping 4 percent.
Big tech companies, including chipmaker Broadcom, software group Oracle and PC maker Dell, and Elon Musk's electric car maker Tesla, also fell as investors continued to pull away from some of the year's biggest gainers.
The S&P 500 is up 23 percent in 2024 despite Monday's retreat, with the Nasdaq up nearly 30 percent.
Thomas Lee, of research house Fundstrat, said the sell-off was the result of “profit-taking” as investors refreshed portfolios at the end of a strong year for equities. He noted that the Federal Reserve again dissuaded investors earlier this month when it forecast two quarterly rate cuts next year – half of its September estimate.
US investors bought government debt on Monday, sending the yield on 10-year Treasury notes down 0.07 percent to 4.55 percent. Fixed income yields move against prices.
More than $26bn exited equity funds last week, including the largest outflow in nearly two years from developed stock market funds, according to data provider EPFR. Investor withdrawals from cryptocurrencies hit a record high while the tech currency marked its longest exit since early 2023.
Investors also placed about 2.1bn in bond funds and parked almost $29bn in low-income market funds, EPFR data showed.
Trading volumes are typically lighter in the last two weeks of the year as many get off Wall Street from work during the holiday season. The New York Stock Exchange will be open on New Year's Eve while the bond markets will have a short trading day, and both will be closed on New Year's Day.