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 tumbled 1%. The Dow Jones Industrial Average, however, rose 0.5% due to its lower exposure to tech stocks.
Fading Hopes for Rate Cuts
The market’s decline was fueled by fading hopes for interest rate cuts ahead of this week’s key consumer inflation report. A hot December jobs report had rattled markets, sparking concerns that the Federal Reserve will 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, while 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, as investors worry that inflation won’t cool to the central bank’s 2% target.
Oil Prices Rise
Oil prices rose to their highest levels in five months, with Brent briefly climbing more than 2% to trade above $81 a barrel, and West Texas Intermediate changing hands near $78. This was due to the US imposing tougher sanctions on Russia’s crude industry, threatening supply to China and India.
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.
Moderna Plunges
Moderna’s stock plunged over 22% after the biotech giant cut its 2025 sales forecast by $1 billion amid soft demand for vaccines.
UnitedHealth Rises
Shares of UnitedHealth rose nearly 4% on Monday morning, helping lift the Dow Jones Industrial Average into positive territory in early trading. This was due to Medicare releasing a proposal that would allow for bigger-than-expected payments for insurance companies in 2026.
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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