Doc Summary
The Dow Jones Industrial Average (.DJI), opens new tab fell 0.95%, the S&P 500 (.SPX), opens new tab was down 1.33% and the Nasdaq Composite (.IXIC), opens new tab briefly was down 1.72%.
“Investors had been saying, oh, I’ll take profits in the New year, and then I can wait to pay taxes on them until 2026; now some of them are wondering How much of those profits will still be around, so they’re just grabbing them now. And there are just more profits to take when it comes to the Nasdaq, which is up more than 30%. There’s a lot of uncertainty about How we’ll do in the first weeks or so of the New year. If the market is indeed worried about inflation, then as we head into 2025, those are likely to be some readings that aren’t so good. But the expectations for earnings growth are still strong, thanks to increased productivity and higher profit margins. The flip side? Valuations are at a 40% premium to the 20-year average for S&P 500 stocks.”
e is selling in Magnificent 7 stocks because they’ve accounted for 100% of all the profits in the S&P 500 so far this month and have outperformed the equal-weighted index, which is down. But the megacap Leadership this time felt more like it was the result of a short squeeze; that investors who had been relatively underweight bringing their holdings back to benchmark levels. I think those exaggerated moves higher mean we could see the Mag 7 continue to lag over the next week or two.”
