NEW YORK — Wall Street is experiencing downward pressure on Monday, attributed mainly to declines in tech stocks like Nvidia, keeping the market in a persistent slump.
During morning trading, the S&P 500 index fell by 0.4%, marking a continuation of a trend where it has lost ground for four out of the last five weeks. The Nasdaq composite suffered a more pronounced decline of 1.1% as of 10:40 a.m. Eastern time. In contrast, the Dow Jones Industrial Average defied the trend, gaining 202 points or 0.5%.
Investor sentiment has been low for about a month, as there is growing skepticism regarding potential interest rate cuts from the Federal Reserve this year. Such cuts are generally viewed as beneficial for the economy, and they had initially contributed to last year’s record highs in the U.S. stock market, following the Fed’s decision to lower rates starting in September. However, persistent inflation above the Fed’s target of 2% and indicators of a robust economy imply that the urgency for rate reductions may be lessening. Consequently, traders are reconsidering whether any rate cuts will actually occur in 2025.
Rising interest rates tend to exert downward pressure on various investments, particularly those perceived to be overvalued. Nvidia’s stock, reflecting this sentiment, dropped by 2.8%, representing a minor setback compared to its substantial gains over recent years, as the company has nearly quintupled its stock value in three years amid AI technology’s rapid ascent. The company’s recent declines are also tied to a proposal from President Biden regarding new frameworks for exporting advanced chips vital for AI development, which industry experts warn could disrupt global supply chains and adversely impact American firms.
Notably, tech giants Apple and Meta Platforms both saw their stocks fall by at least 2%, significantly affecting the S&P 500 due to their size. The index remains on a downward trajectory despite around half of its constituent stocks gaining ground.
Moderna reported a staggering decline of 21.8%—the largest on the S&P 500—after it projected revenue for the upcoming year to be below industry expectations. The vaccine manufacturer is experiencing a slowdown in COVID-19 related sales and is ramping up its cost-cutting measures in research, development, and elsewhere.
Macy’s stock plummeted by 5.7%, as the retailer announced it would likely report revenue for the last quarter of 2024 at or just below the previously anticipated range of $7.8 to $8 billion.
On a positive note, oil and gas companies showed resilience as crude oil prices edged higher. Benchmark U.S. crude increased by 2.1% to $78.19 a barrel, while Brent crude saw a 1.5% rise to $80.98 a barrel. The Biden administration had announced an expansion of sanctions against Russia’s energy sector, contributing to this uptick. Major players like Exxon Mobil grew by 1.6%, Chevron by 2.1%, and Valero Energy surged by 6%.
Meanwhile, in the bond market, Treasury yields are on the rise, with the yield on the 10-year Treasury moving up to 4.78% from 4.76% late Friday. This figure has been consistently climbing for the past month, even hitting below 3.65% just last September. Positive economic reports are pushing yields higher, alongside concerns that upcoming policies from President-elect Donald Trump might also lead to increased inflation alongside economic growth.
A key report scheduled for Wednesday will release the government’s latest data on consumer inflation—an announcement that could influence the bond market. Economists are predicting a slight increase in inflation to 2.8% for December from 2.7% in November.
Additionally, this week will bring earnings reports from major financial institutions like Bank of America and JPMorgan Chase. The upward trend in Treasury yields could lead to declines in stock prices or necessitate increased profit growth from companies to balance the impact.
Across global markets, stock indices in Europe and Asia predominantly fell, with losses of 1% in Hong Kong and 0.2% in Shanghai, even as data showed that China’s exports grew more than anticipated in December, as manufacturers rushed to meet orders ahead of impending tariff increases under Trump’s administration.
