Is the Santa Claus rally in question as Tech stocks slide

As October draws to a close, the prospect of the traditional Santa Claus rally in the U.S. stock market appears to be on hold. After briefly breaking a four-day losing streak, the S&P 500 struggled to maintain its upward momentum, resulting in a drop below the key 4,200 level (SPX), marking its lowest point since early June. Additionally, the index slipped below its 200-day moving average, which stands at 4,238.

 

Tech stocks faced significant headwinds, with the Nasdaq 100 declining by 2.47%. It narrowly avoided a decline of 2.5%, maintaining a streak of 215 days without such a drop. Notably, this sustained resilience in the Nasdaq 100 has not been seen since 2013.

 

Stocks took a sharp downturn around 1:00 PM ET, triggered by a disappointing 5-year bond auction that failed to bolster hopes of a market rebound. The lackluster demand for the $52 billion auction further pressured stock prices, sending them to their lowest levels of the day. In parallel, Treasury yields continued to climb, with the 10-year yield nearing 4.95% and the 30-year yield reaching around 5.1%.

 

Notably, the tech-heavy Nasdaq Composite exhibited relative weakness, primarily due to struggles in cloud software following a slowdown in revenue growth for Google Cloud (GOOGL). Chip stocks also faced headwinds, with the Semiconductor Index (SOX) falling by 4% to reach five-month lows, prompted by Texas Instruments (TXN) guiding Q4 revenue well below consensus expectations.

 

As the month concludes, the U.S. stock market finds itself at a pivotal juncture, with questions surrounding the potential for a traditional year-end rally and concerns about the performance of technology stocks.

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