The stock market closed sharply lower and near session lows Wednesday as losses on the Nasdaq deepened on falling home sales and energy prices. Coal and natural gas stocks also fell, as did technology stocks.
The Nasdaq composite fell 1.4% while the S&P 500 dropped 1.2%. The Dow Jones Industrial Average lost 1.1%. The small-cap Russell 2000 index fell 1.6%.
The Dow Jones industrials are down 5% this month and down 9.5% year to date. The Nasdaq composite and S&P 500 are trading at their lowest levels since early November and threaten to undercut those lows.
Volume rose on the Nasdaq but fell on the NYSE vs. the same time on Tuesday, according to early data. Volume this week is expected to be light as many investors take the week off between Christmas and New Year's.
The yield on the benchmark 10-year Treasury note rose 3 basis points to 3.88%. Crude oil prices fell 1.1% to $78.68 per barrel.
The S&P Energy Select Sector ETF was the worst-performing of all 11 S&P sectors, down 2.2%, followed by the Technology Select Sector ETF, down 1.6%.
The Innovator IBD 50 ETF fell 2%. Oil and natural gas stocks led decliners. Ranger Oil closed down 6.2% and Flex LNG dropped 5.5%. FLNG is now below its 7%-8% sell range from a buy point of 37.09. The stock also gapped below its 50-day moving average.
Santa Claus Rally Didn't Come
"The proverbial 'Santa Claus rally', which since 1950 has statistically returned approximately 1.3%-1.8% nearly 80% of the time, has looked as though Santa has taken an early vacation," said Quincy Krosby, chief global strategist for LPL Financial. "Concerns over Tesla's future earnings have been a major story given demand questions in the U.S. and China, not to mention broader worries over the firm's top leadership."
Tesla closed 3.3% higher. Baird cut its price target on the stock to 252 from 316, but said it still likes the EV company in the long term. Baird called it the "best positioned" company in the auto-making industry.
The stock remains nearly 40% down for the month. Tesla is no longer among the 10 largest companies by market capitalization.
In economic news, pending home sales fell 4% in November, an improvement over the revised 4.7% decline the previous month. Economists had forecast a decline of 0.5%, according to Econoday. The pending home sales index fell from 77.1 to 73.9.
The Richmond Fed manufacturing index rose to 1 in December from -9 the prior month. It also beat expectations.
Disney, Amazon, Apple Sink To New Lows
Walt Disney dropped 2.6% to 84.17, making it the stock's lowest close since Oct. 17, 2014, when it closed at 83.83. It is also below the stock's 2020 pandemic close, according to Dow Jones Market Data.
Apple fell 3.1% today, sinking to a new low for the year.
Other tech and online retail leaders also fell Wednesday. Google parent Alphabet closed down 1.6%. Facebook parent Meta Platforms was down 1.1%. And Amazon.com was down another 1.5%, bringing its one-month decline to more than 11%. Historically speaking, Amazon is one of seven widely held stocks to beat the S&P 500 in Santa Claus rallies in previous years.
Natural gas prices plunged. United States Natural Gas Fund fell 6.6% as temperatures warm up after last weekend's winter storm.
Stock Market Movers And Shakers
Coal stocks also suffered. Consol Energy plunged 11%, and Peabody Energy dropped 9.6%.
AGCO gained 1.1% and climbed above its buy point today. This heavy equipment stock is today's IBD 50 Stocks to Watch pick and a leader in a high-ranking industry group.
Southwest Airlines dropped 5.2% Wednesday as it continues to cancel flights and operate just over one-third of its typical schedule following storm-related problems.
Generac gained 5.6% after Janney Montgomery Scott analyst Sean Milligan initiated coverage with a buy rating and a 160 fair value estimate.
AMC Entertainment stock fell 4.7%. Chief Executive Adam Aron asked the company's board to freeze his compensation in 2023. The move is a response to the meme stock's drubbing in 2022.
Follow Michael Molinski on Twitter @IMmolinski