The Nasdaq Composite closed down more than 1% on the two first trading days of 2024 for the first time since 2005, according to Bespoke Investment Group.
Many of 2023’s leaders, including the "Magnificent Seven" mega-cap tech stocks — Alphabet (Google), Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla — have sold off as investors appear to be taking gains after last year’s rally.
See Also: Tech Titans Tumble: 'Magnificent Seven' Shed $250 Billion in Market Cap On 2024 Day One
Is the start-of-the-year sell-off just a healthy pullback or a sign of things to come for the entire year?
Let’s dive into the data.
The Nasdaq had only opened the year down more than 1% on the first two trading days twice before this week: 1980 and 2005. In both of those years, the tech-heavy index ended the year higher, although 2005 was relatively flat. But in 1980, despite the sluggish start, the Nasdaq Composite closed the year up nearly 34%, according to Nasdaq.
Bespoke also points out that many of the leaders of 2023 are the names experiencing pullbacks to start the year. Apple Inc AAPL is down nearly 3% since the start of the year, while other mega-cap tech stocks such as Microsoft Corp MSFT and NVIDIA Corp NVDA have also stumbled out of the gates.
January is typically just an average month for stocks, ranking as the sixth-best month for S&P 500 returns since 1950, according to Carson Group’s Ryan Detrick.
Detrick also pointed out that mild pullbacks, like the one we’ve seen in the S&P 500 to start the year, typically happen multiple times a year, so it may not be something to worry about — at least not yet.
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