U.S. stocks moved lower in early trading on Monday as investors approached another holiday-shortened week with caution, following a strong late-year rally in equities.
Market participants pointed to signs of profit-taking, particularly in areas that had seen strong momentum. Adam Crisafulli of Vital Knowledge said some corners of the market are beginning to show selling pressure after recent gains.
The S&P 500 slipped 18 points, or 0.2%, to 6,912.20. The Nasdaq 100 fell 86 points, or 0.3%, to 25,505.80, while the Dow Jones Industrial Average dropped 127 points, or 0.3%, to 48,574.64 by mid-morning trading.
Trading activity was expected to remain light, with many investors away from their desks ahead of the New Year holidays. Thin volumes were likely to limit sharp market moves and keep price action subdued.
Wall Street ended the previous week on a strong footing, with the S&P 500 closing at a record high on Friday. Gains were driven largely by a rebound in technology stocks after earlier weakness.
Large-cap growth shares regained momentum as investors returned to sectors viewed as long-term beneficiaries of artificial intelligence and improving financial conditions.
Investor sentiment has also been supported by expectations that the Federal Reserve is nearing the end of its tightening cycle. Markets continue to price in interest rate cuts next year, with recent softer inflation data strengthening the case for policy easing in 2026. This outlook has provided additional support for risk assets.
The late-December advance has kept attention on the so-called Santa Claus rally, a seasonal pattern that refers to market gains typically seen during the final trading days of the year and the first sessions of January.
