Market Turmoil: Tech Stocks Take a Hit
The US stock market is struggling to find its footing, with tech giants like Nvidia and Apple leading the decline. As of Monday morning, the S&P 500 was down 0.4%, while the Nasdaq composite fell 1.1%. The Dow Jones Industrial Average, however, bucked the trend, rising 0.5%.
The Fed’s Interest Rate Conundrum
At the heart of the market’s woes is the uncertainty surrounding the Federal Reserve’s interest rate policy. With inflation stubbornly above the Fed’s 2% target, traders are questioning whether rate cuts will materialize in 2025. Higher interest rates put downward pressure on investment prices, particularly for those seen as expensive.
Nvidia Takes a Hit
Nvidia, a chip company that has nearly quintupled in value over the last three years, fell 2.8% on Monday. The decline came after President Joe Biden proposed a new framework for exporting advanced computer chips used in AI development. Industry warnings about the potential disruption to global supply chains and harm to US companies seem to have spooked investors.
Other Tech Giants Feel the Pain
Apple and Meta Platforms also suffered significant losses, each falling at least 2%. As two of the largest companies on Wall Street, their movements have a disproportionate impact on the S&P 500.
Moderna’s Revenue Forecast Disappoints
Moderna, a vaccine maker, tumbled 21.8% after issuing a revenue forecast that fell short of analysts’ expectations. The company is accelerating a cost-cutting program to reduce expenses in research and development and other areas.
Oil-and-Gas Companies Buck the Trend
Oil-and-gas companies, on the other hand, saw gains as the price of oil climbed. Exxon Mobil, Chevron, and Valero Energy all rose, with the latter jumping 6%. The Biden administration’s expansion of sanctions against Russia’s energy industry likely contributed to the sector’s strength.
Bond Market Volatility
In the bond market, Treasury yields continued their upward trend, with the 10-year Treasury yield rising to 4.78%. Strong reports on the US economy and worries about inflation have driven yields higher. A report on Wednesday is expected to show inflation accelerated to 2.8% in December, which could further impact the bond market.
Earnings Season Ahead
This week will also see earnings reports from major banks, including Bank of America and JPMorgan Chase. If Treasury yields continue to rise, either stock prices need to fall or companies need to produce bigger profit growth to make up for it.
Global Markets Feel the Pinch
Stock markets abroad were mostly lower, with indexes falling in Europe and Asia. Despite China reporting stronger-than-expected export growth, stocks fell 1% in Hong Kong and 0.2% in Shanghai.
Leave a Reply