Tech Stocks Sell-Off Ahead of Earnings, Santa Rally Missing
The three major stock indices on the New York Stock Exchange all fell together. Ahead of the earnings season, profit-taking selling pressure, mainly from technology stocks that had seen significant gains, led to a larger drop in the three major indices.
On the 27th (U.S. Eastern Time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 42,992.21, down 333.59 points (0.77%) from the previous session. The Standard & Poor's (S&P) 500 index fell 66.75 points (1.11%) to 5,970.84, and the Nasdaq Composite Index plunged 298.33 points (1.49%) to close at 19,722.03.
With the sharp decline on this day, expectations for this year's 'Santa Rally' are dim. The Santa Rally typically refers to the tendency of the U.S. stock market to rise during the last five trading days of the year and the first two trading days of the following January. According to LPL Financial, since 1950, the S&P 500 has recorded an average return of 1.3% during this period, surpassing the S&P 500's 7-day average return of 0.3%.
Todd Alsten, Chief Investment Officer (CIO) of Parnassus Investments, said, "This year, the U.S. is closing with strong earnings after experiencing a contentious election cycle and unusual market dynamics, with collective relief among investors," and added, "The market is expected to expand and improve next year as well." John Higgins, Chief Market Economist at Capital Economics, predicted, "The S&P 500 is likely to close near 7000 next year," and "the S&P 500's earnings per share over the next 12 months will increase slightly next year."
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