Nasdaq 100 Outlook: Will Tesla and Nvidia’s Declines Trigger More Selling Next Week?

Tech Weakness and Rising Yields Trigger Friday’s Market Drop

Stocks ended lower on Friday as technology shares led a broad sell-off, driven by rising Treasury yields and cautious investor sentiment. The Dow Jones Industrial Average fell 333.59 points (-0.77%) to 42,992.21, snapping a five-day winning streak. The S&P 500 declined 1.11% to 5,970.84, while the Nasdaq Composite dropped 1.49% to 19,722.03, weighed down by Tesla’s 5% loss and a 2% dip in Nvidia.

Broad Indexes

How Major Averages Performed

The Dow’s decline marked its first drop in six sessions, though the index still posted a weekly gain of 0.4%, breaking a three-week losing streak. The S&P 500 rose 0.7% for the week, while the Nasdaq edged up 0.8%, outperforming the broader market.

Friday’s losses were driven by a surge in the 10-year Treasury yield, which rose to 4.627%, its highest level since May. Higher yields often pressure equities, particularly growth stocks, as investors shift toward fixed income.

Sectors in Focus

Technology and Consumer Discretionary Lead Declines

Technology was the worst-performing sector, falling 1.49%, followed closely by consumer discretionary, which declined 1.9%. Financials and industrials each slipped 0.81%, while real estate fell 0.99%. Defensive sectors such as consumer staples (-0.58%) and healthcare (-0.51%) held up relatively well but still ended in the red.

The energy sector was nearly flat, losing just 0.01%, as oil prices held steady. Utilities, typically viewed as a haven during volatility, declined by 0.29%.

Stock Spotlight

Tesla and Nvidia Weigh Heavily on Nasdaq

Tesla dropped nearly 5% to $431.66, reversing earlier weekly gains and contributing significantly to the Nasdaq’s underperformance. Nvidia, another key Nasdaq component, slid 2.09%, reflecting profit-taking in semiconductor stocks.

Apple shed 1.32%, while Microsoft declined 1.73%, continuing the broader tech sell-off. Amazon slipped 1.45%, further pressuring the consumer discretionary sector.

Among Dow components, Visa fell 0.7%, Boeing bucked the trend with a modest 0.19% gain, and Chevron edged up 0.01%.

Investor Flows and Market Sentiment

Outflows Hit Highest Level in a Year

Bank of America reported $35 billion in equity outflows for the week, marking the largest withdrawal since December 2022. This sharp reversal followed the prior week’s record $62 billion inflow, signaling increasing caution and profit-taking by investors as the year winds down.

Outlook

Can the Santa Claus Rally Save December?

Despite Friday’s pullback, market participants are eyeing the possibility of a “Santa Claus rally” – a historically favorable period during the final trading days of December and the first few days of January. The S&P 500 has averaged a 1.3% return during this stretch since 1950, outperforming typical short-term returns.

However, persistent concerns over trade policy, potential tariffs, and Federal Reserve decisions may temper enthusiasm. Rising yields remain a headwind, particularly for growth sectors. If bond yields stabilize or decline, equities could find renewed strength.

The coming sessions will be crucial in determining whether the recent sell-off is a brief pause or the start of broader profit-taking heading into 2025.

More Information in our Economic Calendar.