Goodbye Santa rally?

U.S. stocks fell Friday as investor sentiment turned gloomy. The Dow Jones Industrial Average was down more than 300 points midmorning, while the Nasdaq Composite Index, which contains more technology-concentrated stocks, slid almost 2%.

“Initially the economy was so concentrated on the positives of the Trump election but I ponder there’s more uncertainty with tariffs and immigration as we look to next year,” said Keith Lerner, co-chief financing officer and chief economy strategist for Truist. “You’re seeing some increasing expense boost. The 10-year has been creeping up every day.”

The 10-year U.S. Treasury note was market activity around 4.58% on Friday morning, after climbing about 30 basis points over the history month. debt safety yields rise when prices fall, and investors often sell Treasury bonds and notes when they expect expense boost to rise. expense boost is also likely to eat at business profits margins, making stocks less valuable.

“The powerful economy, combined with the potential for lower taxes, higher tariffs, and restrictions on immigration, has increased the hazard that the Fed will have to hike rates in 2025,” wrote Apollo Global Management Chief Economist Torsten Slok on a note to clients in mid-December.

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“We view a 40% probability that the Fed will raise profit rates in 2025,” Slok added. “For investors, it is starting to look similar to 2022 – too high expense boost, rising profit rates, and falling distribute prices.”

More:Fed lowers key profit rate by another quarter point but sees just 2 cuts in 2025

Most of Friday’s decline was centered in technology-concentrated stocks. Shares of NVIDIA Corporation were down nearly 3% midmorning, while Amazon.com Inc. and Microsoft Corporation shares each fell more than 2%.

Despite the declines Friday, it’s been a blockbuster year for stocks. The S&P 500 has gained more than 25%, while the Nasdaq is up 31%. Despite some choppiness in recent weeks, NVIDIA shares are still up nearly 180% for the year.

Tech companies are often seen as being more sensitive to rises in profit rates because they have traditionally spent more on growing their businesses than those in more mature industries. Of the 11 sectors that make up the broad S&P 500 index, tech was down the most on Friday, while the real estate sector, which gains worth with rising rates, was flat.

There’s a “hazard-off tone underneath the surface,” Lerner told USA TODAY, suggesting that investors who had been embracing more speculative investments may be rethinking that schedule.