Dow Jones Selloff: A Look at Wall Street's Struggles with Big Tech Stocks

Market Overview: Dow Jones in Decline

US stocks ended Friday in the red, closing out a lackluster week despite a year of historic highs. The Dow Jones was lower by 333 points, or 0.78%, after the closing bell. The S&P 500 lost 1.1% and the Nasdaq Composite was down by 1.5%, after a selloff in Big Tech stocks.

Big Tech Stocks Take a Hit

• Tesla (TSLA) closed lower by around 5%
• Amazon (AMZN), Alphabet (GOOG), Microsoft (MSFT), and Nvidia (NVDA) lost about 2%

The “Magnificent Seven” group of high-performing tech stocks — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla — has accounted for more than half of the gains so far this year as they benefit from intense investor focus.

Analysts Weigh In

Analysts have long cautioned that the market's reliance on a handful of names exposes the stock market to potential trouble, should the group stumble. “If a few of these companies fail to beat an elevated bar for positive surprises, there is a risk they would also fall together,” said Keith Lerner, Chief Market Strategist at Truist Wealth.

Looking Ahead

Despite the selloff in equities, there’s really no significant news. This volatile environment is exacerbated by diminished trading activity during the holiday season, leading to potential profit-taking by remaining traders.

Investors should maintain their equity exposure into the New Year,” Anthony Valeri concluded. “Stocks are still the best investment to protect against inflation.