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 plummeted 0.8%, while the Nasdaq Composite tumbled 1.6%. The Dow Jones Industrial Average, however, managed to stay relatively flat.
Fading Hopes for Interest-Rate Cuts
The market’s downturn can be attributed to fading hopes for interest-rate cuts ahead of this week’s crucial consumer inflation report. A strong December jobs report has raised concerns that the Federal Reserve may keep rates higher for longer, leading to a sell-off in stocks.
Bond Yields and Dollar Soar
The 10-year Treasury yield surged to a 14-month high, trading near 4.8%, as US bonds sold off. Meanwhile, the dollar reached a two-year high against major currency peers, with the UK pound coming under particular pressure.
Consumer Price Index in Focus
Traders are now betting that there will be no rate cut until at least September, and that the Fed will lower borrowing costs by just 30 basis points in 2025. This has put 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 climbed 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, adding to the market’s gloom.
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 also revealed that it sold its entire stake in Tesla over CEO Elon Musk’s pay package.
Moderna’s Sales Forecast Cut
Moderna’s stock plunged over 22% after the biotech giant cut its 2025 sales forecast by $1 billion due to soft demand for vaccines. The company’s shares sank 23% at the open on Monday.
Economic Data and Earnings
New York Fed one-year inflation expectations for December are due out, along with earnings from KB Home. Investors will be keeping a close eye on these numbers as they navigate the market’s volatility.
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