Angela Palumbo
Tech stock's are trying to stage a comeback in what's been a naughty, not nice, time for the Magnificent 7, even with the start of a possible "Santa Claus rally" right around the corner.
Friday was a busy data day for the stock market. The Bureau of Economic Analysis reported a deceleration in the Federal Reserve's preferred inflation measure for November. That was welcome news to investors after Fed Chair Jerome Powell signaled on Wednesday that policymakers will be more cautious on rate cuts next year.
After initially falling earlier on Friday, Magnificent 7 tech stocks were staging a comeback. Shares of Apple were up 0.1%, Nvidia climbed 1.9%, Alphabet rose 0.3%, Tesla increased 1.1%, and Meta Platforms was 0.1% higher. Also, Amazon.com was rising 0.3% and Microsoft was up 0.4%.
Still, a looming government shutdown right before Christmas has worried investors.
"The market woke up in a terrible mood -- an unexpected government shutdown, and a more-hawkish-than-expected Fed are to blame -- but this morning's inflation data came in lower-than-expected and took some of the edge off," Chris Zaccarelli, chief investment officer for Northlight Asset Management, wrote on Friday.
Tom Essaye, founder of the Sevens Report, wrote on Friday that stocks weren't down "because of the shutdown itself, but instead because this is the type of political chaos markets fear in a second Trump term."
After the central bank's comments on interest rates, along with political uncertainty, all of the Mag 7 stocks except for Apple and Tesla are ending the week in the red, collectively dropping an average of about 1% this week, according to Dow Jones Market Data. This comes just ahead of a time that is historically known as the "Santa Claus Rally," when stocks traditionally rise during the last five trading days of December and the first two of January.
Some investors may use this week's drop as a buying opportunity, while others may take this as a chance to take profits from highly valued tech stocks ahead of what is looking to be an uncertain new year.
"If the selling builds throughout the day and there is momentum (to the downside) heading into the weekend then that would be a bad sign for next week," Zaccarelli wrote. "However, if we see some dip-buying later today and the market finishes significantly higher than the lows of the day would suggest, then that would make us more optimistic for next week."
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 20, 2024 11:20 ET (16:20 GMT)
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