Stocks fell from their all-time highs on Monday, the penultimate trading day of a record-breaking year for equities.
The Dow Jones Industrial Average traded about 83 points lower, while the S&P 500 fell 0.3%, on pace for its worst day in three weeks. The Nasdaq Composite was trading 0.4% lower, back below 9,000. Tech was the worst-performing sector among the 11 S&P 500 groupings.
Some of the biggest winners of the year, including Microsoft, Visa, NIKE, and Procter & Gamble, were all in the red on Monday as investors took profits. Microsoft and Visa were among the top five gainers in the Dow this year, rallying 55% and 42%, respectively.
“The best-performing Q4 sectors are leading to the downside today, and that implies some short-term selling and people positioning before year-end,” said Tom Essaye, founder of the Sevens Report. “The market was very overbought at the end of last week. Nothing really new has occurred to push the market up in the year-end.”
U.S. equities have enjoyed a strong rally in December, with the main indexes hitting record highs last week amid year-end optimism. The S&P 500 has notched five straight weeks of gains, rising about 29% in 2019. The benchmark is within reach of a historic year, sitting about a percentage point away from having its best year since 1997.
“Investors probably shouldn’t read too much into the price action owing to the fact markets are in the midst of a liquidity, attendance, and news desert during these final few days of the year,” Adam Crisafulli, founder of Vital Knowledge, said in a note Monday.
Monday marks day four of the so-called Santa Claus rally period, which has historically given a boost to stocks. The S&P 500 rose 0.5% last week during the shortened holiday trading. Since 1950, the benchmark has rallied an average of 1.3% during the final five trading days of the year and the first two sessions of the new year, according to the Stock Trader’s Almanac.
Market sentiment has been boosted by the easing tensions over U.S.-China trade relations. The world’s two largest economies agreed earlier this month to a so-called “phase one” trade deal.
The South China Morning Post reported Monday Chinese Vice Premier Liu He, the nation’s top trade negotiator, will visit Washington this week to sign the agreement. The newspaper, citing a source briefed on the matter, said the Chinese delegation will stay in the U.S. for a few days until the middle of next week.
However, political concerns continue to simmer in the background after President Donald Trump was impeached by the House of Representatives. The president over the weekend retweeted a post that included the alleged name of the whistleblower whose complaint led to Trump’s impeachment.
The advance report on the U.S. trade in goods on Friday showed the trade deficit shrank to its narrowest since 2016 in November.
— CNBC’s Ryan Browne contributed to this report.
