Wall St hit by sell-off at end of strong holiday-shortened week

Stocks drop in broad selloff; Dow set to snap 5-session win run

All three main indexes set for weekly gains though

Amedisys gains after extending UnitedHealth merger deadline

Indexes down: Dow 0.98%, S&P 500 1.38%, Nasdaq 1.85%

(Updates to early-afternoon trade)

Dec 27 (Reuters) – Wall Street’s holiday cheer ended abruptly on Friday, with all three main benchmarks slumping in a broad-based sell-off affecting even tech and growth stocks that had driven markets higher through much of the shortened trading week.

The Dow Jones Industrial Average was 0.98% lower at 1.39 p.m. ET, falling 422.63 points to 42,903.17. The index is on course to snap a five-session winning streak following a 10-session decline, its worst losing stretch since 1974.

The S&P 500 slipped 1.38%, or 83.08 points, to 5,954.51, and the Nasdaq Composite declined 1.85%, or 371.34 points, to 19,649.01.

The sell-off thwarted the seasonal Santa Claus rally, in which stocks traditionally rise during the last five sessions of December and the first two of January. Since 1969, the S&P 500 has climbed 1.3% on average, according to the Stock Trader’s Almanac.

“If nothing else, today is a reminder that just because a Santa Claus rally is a statistical likelihood, it is far from guaranteed,” said Steve Sosnick, chief market strategist at Interactive Brokers.

Thursday’s session hinted at momentum stalling, with both the S&P 500 and Nasdaq posting marginal losses to end multi-session winning runs.

Rising U.S. Treasury yields had been catching investors’ attention, with the benchmark 10-year note hitting a more than seven-month high in the previous session. The yield hovered close to that mark on Friday, at 4.61%.

Higher yields are seen as hampering growth stocks, as they raise borrowing costs for business expansion. These stocks, especially the so-called Magnificent Seven technology megacaps which had been key drivers of the market’s 2024 rally, were also caught up in Friday’s sell-off.

For the second successive day, Tesla led decliners among the group, off 4.4%. Amazon.com, Microsoft and Nvidia also shed more than 2%.

All 11 major S&P sectors fell. The worst performers on Friday were the three indexes which have been 2024’s leading lights: consumer discretionary, information technology and communication services. The trio were trading between 1.5% and 2.1% lower on the day.

“Tech, which has had a tremendous run, is starting to pull back. It is the beginning of a healthy correction that will get focused in on over the next four to eight weeks as we switch administrations,” said Jay Woods, chief global strategist at Freedom Capital Markets.

Despite Friday’s travails, all three indexes were set for weekly gains, with the S&P 500 now about 2.3% below its all-time high of 6,099.97 points clinched on Dec. 6.

News events helped some stocks to buck the market sell-off.

Amedisys gained 4.7% after the home health service provider and insurer UnitedHealth extended the deadline to close their $3.3 billion merger.

Lamb Weston climbed 4.1% after a filing showed activist investor Jana Partners is working with a sixth executive to push for changes at the French fry maker, a move which could result in a majority of the company’s board being replaced.

Trading volumes in this holiday-shortened week have been below the average of the last six months and are likely to remain subdued until Jan. 6. The next major focus for markets will be the December employments report due on Jan. 10. (Reporting by Medha Singh and Purvi Agarwal in Bengaluru and David French and Carolina Mandl in New York; Editing by Devika Syamnath and Richard Chang)