[New York Stock Market Briefing] Santa Rally 'Stops' Due to Profit-Taking... Nasdaq Falls 1.49%

All major indices of the New York Stock Exchange fell. Although there were no significant positive or negative factors, it is interpreted that profit-taking sell-offs, especially in tech stocks that had risen significantly this year, increased downward pressure on the three major indices ahead of the year-end settlement.

On the 27th (local 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 day. The Standard & Poor's 500 Index (S&P 500) fell 66.75 points (1.11%) to 5,970.84, and the Nasdaq Composite plunged 298.33 points (1.49%) to end at 19,722.03.

There were no clear negative factors. Many investors were on holiday for the year-end, and there were no remarks from key figures of the Federal Reserve or changes in U.S. government policy.

Instead, as U.S. stock indices surged this year, it is interpreted that a large amount of sell-offs emerged as many investors achieved high returns ahead of the year-end settlement. With three days left until the end of this year's trading, the desire for profit-taking is likely to grow due to the high returns.

However, due to the sharp decline on this day, the 'Santa Rally' this year is difficult to expect. 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, the S&P 500 has recorded an average return of 1.3% during this period since 1950. This surpasses the 7-day average return of 0.3% for the S&P 500 index.

Todd Ahlsten, Chief Investment Officer (CIO) of Parnassus Investments, said, "This year, the U.S. is collectively breathing a sigh of relief with strong profits after experiencing a contentious election cycle and unusual market dynamics," and predicted, "The market will expand and improve next year as well."

John Higgins, Chief Market Economist at Capital Economics, said, "The S&P 500 is likely to end near 7,000 next year," and "The S&P 500's earnings per share over the next 12 months will slightly increase next year."

The 'Magnificent 7 (M7)', referring to seven giant tech companies, all fell on this day. Tesla dropped over 4%, Nvidia fell more than 2%, and Apple, Microsoft, Amazon, Meta Platforms, and Alphabet all experienced declines of around 1%.

Broadcom, recently surpassing a market cap of $1 trillion and gaining attention as a beneficiary of artificial intelligence (AI), also fell 1.5%. Other top market cap stocks excluding big tech were also weak.

Netflix fell nearly 2% despite the success of the NFL during the Christmas holiday period, and Eli Lilly, Walmart, and JPMorgan Chase also fell around 1%. Netflix's NFL live broadcast set a new record with about 65 million viewers this Christmas.

Meanwhile, it was reported that OpenAI, which brought innovation to the AI market with its ChatGPT service, intends to convert its for-profit subsidiary into a public benefit corporation (PBC). A public benefit corporation is a corporation that considers social values, including customers and employees, in addition to pursuing shareholder interests.

The market is speculating that OpenAI is taking steps towards listing by converting its subsidiary into a PBC.

Shin Min-kyung, Hankyung.com reporter radio@hankyung.com