Market Turmoil: Tech Stocks Lead the Slide
The US stock market took a hit on Monday, with tech stocks leading the decline. The S&P 500 fell 0.4%, while the Nasdaq Composite plummeted 1%. The Dow Jones Industrial Average, however, bucked the trend, rising 0.5%. This comes after Friday’s sharp drop, which erased all year-to-date gains for Wall Street’s major indices.
Fading Hopes for Rate Cuts
The market’s downturn is attributed to fading hopes for interest rate cuts ahead of this week’s crucial consumer inflation report. A hot December jobs report has raised concerns that the economy’s strength will encourage the Federal Reserve to keep rates higher for longer. As a result, traders are now betting that there will be no rate cut until at least September, with the Fed expected to lower borrowing costs by just 30 basis points in 2025.
Dollar and Bond Yields Soar
The dollar surged to a two-year high against major currency peers, with the UK pound coming under particular pressure. Meanwhile, the 10-year Treasury yield touched a 14-month high, trading near 4.8%. This has intensified the spotlight on the Consumer Price Index reading for December, due on Wednesday.
Oil Prices Rise
Oil prices rose to their highest levels in five months before paring gains, following the US imposition of tougher sanctions on Russia’s crude industry. This has threatened supply to China and India. Brent briefly climbed more than 2% to trade above $81 a barrel, while West Texas Intermediate changed hands near $78.
Tech Megacaps Take a Hit
Shares of Nvidia, Apple, and Tesla slid, with all the “Magnificent Seven” tech megacaps losing ground in the market turmoil. Europe’s largest pension fund revealed that it sold its entire stake in Tesla over CEO Elon Musk’s pay package.
Biotech Giant Moderna Plunges
Moderna’s stock plummeted over 22% after the biotech giant cut its 2025 sales forecast by $1 billion amid soft demand for vaccines.
Bitcoin Falls
Bitcoin fell 3% over the past 24 hours to hover just below $92,000 per token. Enthusiasm for the token has waned in recent days as risk assets have sold off amid rising US Treasury yields and a higher US Dollar.
MicroStrategy Buys Bitcoin
Meanwhile, bitcoin proxy MicroStrategy bought about 2,530 tokens for $243 million between January 6 and January 12, according to the company’s latest filing. The company currently holds approximately 450,000 bitcoins. MicroStrategy stock slumped 4% on Monday.
Economic Data and Earnings
New York Fed one-year inflation expectations for December are due out, while KB Home is set to release its earnings.
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