Tech Stocks Pull Back as Investors Rotate to Other Sectors

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Tech Stocks Pull Back as Investors Rotate to Other Sectors
Tech StocksMarket RotationSectoral Rotation

Tech stocks experienced a pullback on Monday as investors took profits from last year's strong performers and sought out new opportunities in other sectors. While the S&P 500 and Dow Jones Industrial Index saw modest gains, Nvidia and Palantir dropped significantly. Experts suggest this rotation is a natural part of the market cycle and that a long-term shift away from tech may not be imminent. However, a rotation within the tech sector, particularly away from AI, cannot be ruled out.

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Nvidia CEO Jensen Huang delivered a keynote address at the Consumer Electronics Show 2025 in Las Vegas, Nevada, USA, on January 6, 2025. This report is from today's CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. \Meanwhile, Nippon Steel's bid for U.S. Steel has been blocked by the White House earlier this month, sources told CNBC's David Faber.

The offer would be in the high $30s a share. Nippon had planned to buy U.S. Steel for $55 per share in a deal valued at more than $14 billion. India's retail inflation eased to 4.68% in December 2024, according to the Ministry of Statistics and Programme Implementation. The reading's lower than the 5.30% forecast by a Reuters poll of analysts, and the second straight month that price growth fell. The softer inflation reading offers room for the RBI to cut rates. \On a different note, Meta Platforms CEO Mark Zuckerberg said on a Friday podcast by Joe Rogan that the technology is 'quite a ways off from being a very useful paradigm.' The comments reinforce recent commentary from other tech leaders who have expressed similar sentiments. Rick Rieder, who is the company's chief investment officer of global fixed income, told CNBC he would 'one hundred percent' buy the Nasdaq dip. Tech stocks underperformed on Monday as investors took profit on the victors of 2024 and looked for this year's winner. Some of the biggest tech names in the S&P last year โ€” slid 3.4%, while Nvidia lost 2%, building upon their losses from last week. Nvidia fell almost 6% during the period, while Palantir lost more than 15%. 'That's a necessary part of a corrective phase in our view and we are likely further along in this correction than many investors recognize since many stocks peaked in late November, early December,' said AXS Investments CEO Greg Bassuk, adding that Friday's jobs report 'cemented' those concerns. However, the S&P 500 inched up 0.16% and the Dow Jones Industrial Index climbed 0.86% as investors rotated into nontech shares such as energy, staples and healthcare. That's not to say those sectors will be taking the mantle of market leader anytime soon โ€” or at all. Sectoral rotation is a common phenomenon in markets, as investors secure their returns and look for the next stocks with upside potential. And the long-term rotation out of tech and AI isn't likely. But one within the field cannot be dismissed

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