U.S. stocks fell on Wednesday, slumping in a broad decline as the market’s multiweek rally—which has taken indexes to repeated records and the Dow within mere points of the 20,000 milestone—stalled.
All 11 of the S&P 500’s primary sectors ended lower on the day, while the benchmark index itself suffered its biggest one-day point and percentage drop since October. Financials and materials, two of the best-performing industries of late, were among the hardest hit, with both down about 1%.
Don’t miss: If the Dow doesn’t hit 20,000 on Wednesday, it has nearly two months to notch second fastest move from one thousand-point milepost to the next
Equities have been in a strong uptrend since last month’s presidential election, with investors betting that the policies President-elect Donald Trump is expected to pursue, including massive corporate tax cuts and deregulation, will accelerate economic growth. However, the size and speed of the rally has raised concerns over the market’s valuation.
“Valuations have been a worry for a year, but mostly in the context of whether we could see a substantial or a more measured move higher from here,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. “We’re looking to see if we can get any follow-through with the rally this week, something that could put a nice exclamation point on the year.”
The final week of the year is typically a quiet one for markets, with few expected news events—such as central-bank meetings or corporate earnings—to dictate market direction. Tuesday’s session was marked by the lowest New York Stock Exchange composite trading volume of any full session this year. While these elements typically result in a market that has little pronounced direction, the lower liquidity can also leave equities vulnerable to outsize swings.
Even the traders who aren’t concerned about valuation may look to take profits and lock in some of the year’s gains. Nvidia Corp. NVDA, -1.24% snapped a 10-day streak of gains, tumbling 6.9% on the day. However, it remains the S&P’s biggest gainer of 2016, having more than tripled.
The decline in the stock weighed on the semiconductor sector, which in turn depressed tech shares. The S&P technology sector fell 0.9%; it was among the worst-performing industries on the day.
The Dow Jones Industrial Average DJIA, -0.56% fell 111.36 points to end at 19,833.68, a drop of nearly 0.6%. The S&P 500 SPX, -0.84% lost 18.96 points, or 0.8%, to close at 2,249.92. The tech-heavy Nasdaq Composite Index COMP, -0.89%slumped 48.89 points to 5,438.56, a loss of 0.9%. The Nasdaq closed at a record on Tuesday.
The Dow has been flirting with 20,000 for the past few weeks, at one point trading within 20 points of the milestone. While the level is seen as psychologically important, it holds little fundamental or technical significance. However, repeated attempts to penetrate it failed, suggesting it is becoming a resistance level.
“It’s a reminder that markets are up a lot, which leads to investors becoming more selective in their buying habits,” Luschini said.
Other markets: Oil futures CLG7, -0.87% rose slightly on the day, while European stocks SXXP, +0.29% inched up in thin trading and Asian markets closed mixed. Gold futures GCG7, +0.19% rose by 0.4% while a key dollar index DXY, +0.17% rose 0.3%.
Economic news: In the latest economic data, U.S. pending home sales fell 2.5% in November.
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Corporate news: British oil giant BP PLC BP, +0.38% BP., +1.17% made its latest move to rebuild following the deadly Deepwater Horizon disaster, agreeing to buythe fuels business of Australian retailer Woolworths Ltd. WOW, +1.93% for 1.79 billion Australian dollars ($1.29 billion). U.S.-listed shares of BP rose 0.4%.
Delta Air Lines Inc. DAL, -1.69% on Tuesday officially canceled a deal for 18 Boeing widebody jets that, though the move was long anticipated, leaves a dent in Boeing Co.’s BA, -0.88% 2016 order book. Shares of Delta fell 1.7%, while Boeing lost 0.9%.