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U.S. stocks lost some steam on Thursday, amid speculation that the market may have overestimated the size and speed of the rally.

The pullback came after the S&P 500 index closed near record highs on Wednesday. Technology stocks came under pressure, with the Nasdaq 100 index underperforming after rising more than 50% in 2023.

The S&P 500 was down 0.3% at 4:00 p.m. ET, while the Nasdaq 100 was down 0.1%.

Factors behind the pullback

There were several factors that contributed to the sell-off in stocks, including:

Expectations of near-term profit-taking: Investors are expecting strong earnings in the fourth quarter of the year, which could lead to profit-taking before the end of the year.
High stock valuations: Stock prices have risen by more than 20% in 2023, making them relatively expensive.
Geopolitical risks: The war in Ukraine continues to cause disruptions in financial markets.

Future outlook

Despite the pullback, investors remain optimistic about the outlook for financial markets in 2024. They are expecting the Federal Reserve to cut interest rates, which would support economic activity.

“This should not change our views on the favorable environment we are currently in,” said Callie Cox of eToro.

Fed expectations

In its latest meeting, the Fed projected that it would begin cutting interest rates in 2024. Economists at some of Wall Street’s largest banks expect the Fed to begin cutting interest rates sooner and faster than that.

U.S. stock market falls amid profit-taking concerns

U.S. stock market falls amid profit-taking concerns

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