S&P 500 and Nasdaq 100: Palantir and Microstrategy Slide on Year-End Profit-Taking

Semiconductor stocks were hit hard, with Broadcom (-1.99%) and Advanced Micro Devices (-0.45%) giving back gains. Software leaders also struggled—Adobe fell 1.68%, while Salesforce dipped 1.22%. The losses were broad, reflecting tax-related rebalancing and low liquidity rather than negative company-specific news.

Institutional Rebalancing and Treasury Yields Pressure Equities

Market insiders noted potential institutional rebalancing as a key driver of the sell-off. Pension funds and asset managers appeared to shift allocations away from equities and toward bonds, with the 10-year Treasury yield climbing to 4.60%. This movement weighed on rate-sensitive tech stocks, reinforcing the downward momentum.

Adding to the pressure, Bank of America reported $35 billion in equity outflows this week, the largest since December 2022. This shift reversed the previous week’s record $62 billion inflow, reflecting caution as investors reposition portfolios ahead of the new year.

Thin Liquidity Amplifies Market Moves

The absence of institutional buyers in the final trading days of 2024 contributed to exaggerated market movements. Analysts cited low liquidity as a major factor, allowing modest selling to cascade across indexes. “Buy-the-dip” efforts were repeatedly rejected, suggesting that large investors are waiting for clearer signals in January before re-entering the market.