(Bloomberg) — A selloff in the world’s largest technology companies hit stocks in the final stretch of a stellar year.

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In another session of slim trading volume — which tends to amplify moves — the S&P 500 lost over 1% and the Nasdaq 100 slipped nearly twice as much. Almost every major industry fell, with Tesla Inc. and Nvidia Corp. leading losses in megacaps. That’s after a torrid surge that saw the tech behemoths dubbed “Magnificent Seven” accounting for more than half of the US equity benchmark’s performance in 2024.

“I think Santa has already come, but that’s me. Have you seen the performance this year?” said Kenny Polcari at SlateStone Wealth. “It’s Friday, next week is another holiday-shortened week, volumes will be light, moves will be exaggerated. Don’t make any major investing decisions this week.”

To Tom Essaye at The Sevens Report, sentiment is no longer euphoric and markets will start the year with regular investors much more balanced in their outlook — and that would be a “good thing as it reduces air pocket risk,” but advisors have largely ignored the recent volatility.

“It’s fair to say that this recent dip in stocks has taken the euphoria out of individual investors, but it has not dented advisors’ sentiment,” he said. “And if we get bad political news or Fed officials pointing towards a ‘pause’ in rate cuts, that likely will cause more short, sharp drops.”

The S&P 500 fell 1.3%. The Nasdaq 100 slid 1.8%. The Dow Jones Industrial Average slipped 0.9%. A Bloomberg gauge of the “Magnificent Seven” shares sank 2.4%. The Russell 2000 index of small caps dropped 1.6%.

The yield on 10-year Treasuries was little changed at 4.58%. The Bloomberg Dollar Spot Index fell 0.1%.

“Valuation alone not a reason to be bearish, but impacts risk/reward in the near-term,” said John Belton at Gabelli Funds. “Bottom line: a bit more cautious on stocks into next year versus where we’ve been positioned. Credible reasons for excitement, balanced by elevated valuations and a host of unknowns.”

This year’s rally in US equities has driven the expectations for stocks so high that it may turn out to be the biggest hurdle for further gains in the new year.

The bar is even higher for tech stocks, given their massive rally this year.

A Bloomberg Intelligence analysis recently found that analysts estimate a nearly 30% earnings growth for the sector next year, but tech’s market-cap share of the S&P 500 index implies closer to 40% growth expectations may be embedded in the stocks.

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