NEW YORK — Wall Street is experiencing pressure from declining prices for tech stocks such as Nvidia, keeping the markets in a protracted slump as trading continues on Monday.
The S&P 500 index saw a decrease of 0.6% during midday trading, marking its fourth week of losses in the past five. The Nasdaq composite took a more significant hit, dropping 1.3% around 11:35 a.m. Eastern, while the Dow Jones Industrial Average experienced a slight increase, rising by 139 points or 0.3%.

The market has faced challenges over the past month as investors adjust their expectations for potential interest rate cuts from the Federal Reserve this year. Such reductions are anticipated to provide a much-needed boost to the economy, and last year’s stock market rally was largely built on the assumption of forthcoming cuts following the Fed’s rate decreases initiated in September. However, inflation has remained stubbornly above the Fed’s target of 2%, and recent reports indicate that the robust U.S. economy might not require such assistance. Speculation is mounting regarding the likelihood of even one rate cut in 2025.

Elevated interest rates negatively affect investment prices, particularly for assets considered expensive, which often suffer the most. Nvidia’s stock fell 2.9%, becoming a significant drag on the S&P 500, although this decline accounts for only a fraction of its substantial gains over recent years. The company saw its stock price nearly increase fivefold in the previous three years, driven by enthusiasm for artificial intelligence advancements.

Nvidia’s recent struggles stem partially from a proposal by President Joe Biden concerning new regulations for exporting advanced computer chips crucial for AI development. Despite industry warnings that such a rule could disrupt global supply chains and harm U.S. companies, the administration is pushing forward.

Other major tech players also contributed to the market’s woes, as Apple dropped 2.3% and Microsoft fell 1.2%. Given their status as two of the most influential companies on Wall Street, their stock movements disproportionately impact the S&P 500, which is on course for another loss, despite an increasing number of stocks showing gains within the index.

Moderna faced a significant setback, plunging 21.5%, the steepest loss on the S&P 500, after the company projected revenue for the upcoming year below what analysts had anticipated. The vaccine maker is experiencing a downturn in COVID-related sales and is expediting cost-cutting measures across its research and development sectors.

Macy’s shares decreased by 6.3% after the retailer indicated that its revenue for the final months of 2024 would likely be on or just beneath the lower end of its previously announced forecast of $7.8 billion to $8 billion.

On a more favorable note, oil and gas companies benefited from rising oil prices. U.S. crude oil prices rose by 3%, reaching $78.82 per barrel, while Brent crude gained 1.8%, climbing to $81.23 a barrel. The Biden administration’s announcement on Friday regarding expanded sanctions against Russia’s energy sector has contributed to these price changes.

In the bond market, Treasury yields continue to influence Wall Street’s trends. Recently, the yield on the 10-year Treasury note increased to 4.79%, up from 4.76% late Friday, continuing its upward trajectory from below 3.65% just last September. Strong economic data from the U.S. has driven yields higher, compounded by concerns about potential tariffs and other inflationary policies that may arise from President-elect Donald Trump’s administration.

This Wednesday, the government is set to release the latest monthly inflation update, which could further impact the bond market. Economists anticipate a slight increase in inflation, projecting it to rise to 2.8% in December from 2.7% in November.

According to strategists at Morgan Stanley, including Michael Wilson, “rates remain the most important variable for equity market direction.” Along with inflation data, this week will also see earnings reports from major financial institutions such as Bank of America and JPMorgan Chase, kicking off the earnings reporting season.

If Treasury yields persist in their upward trend, stock prices will either need to decrease or companies must demonstrate stronger profit growth to compensate.

International stock markets also reflected a downward trend, with major indexes primarily lower throughout Europe and Asia.
Stocks in Hong Kong dropped 1%, while Shanghai fell 0.2%, even as China’s exports saw a faster-than-expected growth rate in December. Factories are racing to fulfill existing orders to avoid the higher tariffs recently threatened by Trump.