Nvidia (NVDA) stock continued to slide on Tuesday after shares fell more than 10% from a November record close. The chip giant’s stock dropped nearly 3% in early trade before bouncing off of its session lows.
The moves echoed a decline across all three major indexes, which have taken a breather as investors debate what could happen to the US economy in 2025.
This rally, which has been really dramatic since July, is starting to look a little bit vulnerable,” James Demmert, chief investment officer at Main Street Research, told Yahoo Finance‘s Morning Brief.
“So going into 2025, I think investors should start to prepare themselves emotionally for a normal correction of 8% to 12% in markets,” he cautioned.
Demmert, who said the Federal Reserve “is probably already at the neutral rate” and likely won’t need to cut interest rates much more from here, also touched on market breadth in the new year after the rapid rise in mega-cap Big Tech stocks.
According to the latest Bank of America Fund Manager Survey, “long Magnificent 7 is considered the most crowded trade,” per 57% of surveyed investors.
“It’s been such a Mag 7 market,” Demmert said. “In 2025, we think those stocks do well, but other stuff will also do well or better” amid more attractive valuations and AI-driven use cases, which are expected to fuel earnings.
