NEW YORK (AP) – Drops for Nvidia and other technology stocks weigh on Wall Street on Monday and keep it in its multi-week rut.
The S&P 500 was down 0.4% in morning trading, breaking out of its fourth losing week in last five. Weakness in big tech stocks led the Nasdaq composite to a 1.1% loss as of 10:40 a.m. ET, while the Dow Jones Industrial Average was an outlier and up 202 points, or 0 .5%.
Stocks have been under pressure over the past month as traders have lowered their expectations for how much relief the Federal Reserve could provide this year. lower interest rates.
Such cuts would provide a boost to the economy, and much of the U.S. stock market’s record run last year was based on the assumption that more cuts would come after the Fed began tapering its rates in September. But inflation has remained stubbornly above the Fed’s 2% target, and recent reports suggested a A still strong American economy doesn’t need much help thanks to lower rates. Traders are starting to wonder if the Fed will make cuts in 2025.
Higher rates put downward pressure on the prices of all kinds of investments, and those considered expensive can take the biggest hits. Nvidia fell 2.8% and was the heaviest weight on the S&P 500, although that represents only a tiny fraction of the huge gains it has made in recent years. Shares of the chip company have risen almost fivefold in the past three years, amid a frenzy artificial intelligence technology.
I felt pressure after President Joe Biden proposed a new export framework of the advanced computer chips used to develop AI. That’s despite industry warnings that a hastily implemented new rule could fragment global supply chains and hurt U.S. businesses.
Apple and Meta Platforms were also among the market’s heaviest weights after each falling at least 2%. Because they are two of the largest companies on Wall Street, their stocks carry more weight on the S&P 500 than other stocks. The index is on track for another loss, even though about half of the stocks in it are up.
Modern fell 21.8%, the largest loss in the S&P 500 after giving revenue forecasts for the coming year that fell short of analysts’ expectations. The vaccine maker, seeing a slowdown in COVID-related sales, is accelerating its cost-cutting program to reduce spending on research and development and other areas.
Macy’s fell 5.7% after saying it would likely report revenue for the final three months of 2024 that would be at or slightly below the lower end of the $7.8 billion to $8 billion forecast range. of dollars that she had previously donated.
On the winning side of Wall Street were oil and gas companies after the price of oil rose. Benchmark U.S. crude rose 2.1% to $78.19 a barrel, while Brent crude climbed 1.5% to $80.98 a barrel. The Biden administration said Friday that it was extend sanctions against the Russian energy industry.
Exxon Mobil gained 1.6%, Chevron climbed 2.1% and Valero Energy jumped 6%.
In the bond market, which has dictated much of Wall Street’s action lately, Treasury yields were even higher.
The 10-year Treasury yield rose from 4.76% to 4.78% Friday evening. It has been steadily climbing over the past month and was below 3.65% as recently as September.
Strong reports on the U.S. economy helped push yields higher. We must therefore fear that tariffs and other policies possibly emanating from President-elect Donald Trump will stimulate inflation as well as economic growth.
A report due Wednesday could offer the next spark for the bond market. That’s when the government will release the latest monthly update on inflation experienced by U.S. consumers. Economists expect inflation to accelerate slightly, from 2.7% in November to 2.8% in December.
Apart from that, next week will also feature earnings reports from several major banks, such as Bank of America and JPMorgan Chase. If Treasury yields continue to rise, either stock prices will have to fall or companies will have to generate greater earnings growth to offset the rise.
In foreign stock markets, indices were mostly down in Europe and Asia.
Stocks fell 1% in Hong Kong and 0.2% in Shanghai, even as China announced its exports grew at a faster pace than expected in December. Factories were rushing to fill orders in order to beat higher rates which Trump has threatened to impose once he takes office.
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AP writers Matt Ott and Zimo Zhong contributed.