The S&P 500 and Nasdaq Composite ended the first trading day of 2024 with lower closing values, led by a dip in Apple shares following a broker downgrade and losses in other large tech companies as a result of Treasury rates moving higher.
The dull session comes after a year in which the three main Wall Street indexes saw double-digit gains due to confidence about inflation stabilizing and artificial intelligence. Last week’s closing price of the S&P 500 was just 1% below the record high set in early 2022.
But on Tuesday, U.S. Treasury rates increased, pushing up 10-year note yields to a two-week high before retreating slightly to 3.937%, which put pressure on stocks.
The fluctuation in Treasury yields was indicative of investors’ reduced anticipations for rate reductions in the United States this year. Consequently, growth equities, including tech companies, were negatively impacted. These stocks would have benefited from a more favorable rate environment.
Following Barclays’ downgrading of the tech giant to “underweight” due to declining iPhone demand, Apple (AAPL.O) saw a 3.6% decline. Microsoft (MSFT.O), Nvidia (NVDA.O), and Meta Platforms (META.O) were among the other mega-cap stocks that saw a decrease, falling between 1.4% and 2.7%.
Chief of investment strategy & research at Glenmede Jason Pride said, “Everyone was very excited by the tail-end rally, the Fed – on the surface at least – paring back a little, and the fact we didn’t have a recession. But does that mean we’re out of the woods yet? I suspect, even if the Fed brings rates down gradually, monetary policy is still tight and still likely to be a hindrance to overall economic activity.”
This week, market participants will be examining the Fed’s December policy meeting minutes and an abundance of labor market data in an attempt to determine when prospective rate cuts may occur.
According to the CME Group’s FedWatch tool, traders anticipate a nearly 70% possibility of a 25-basis point decrease in March, even if the Fed is generally expected to maintain rates at its January meeting.
The Nasdaq Composite (.IXIC) dropped 245.41 points, or 1.63%, to 14,765.94, while the S&P 500 (.SPX) lost 27 points, or 0.57%, to close at 4,742.83 points. At 37,715.04, the Dow Jones Industrial Average (.DJI) increased by 25.5 points, or 0.07%.
The S&P 500 has a variety of sectors. The best performance was Healthcare (.SPXHC), which had a 1.8% increase and its highest closing since mid-December 2022. Following the vaccine maker’s upgrade by brokerage Oppenheimer, Moderna’s (MRNA.O) 13.1% increase led the sector higher and reaffirmed the company’s objective of attaining sales growth by 2025.
Despite oil declining due to worries over the economic outlook, the energy index (.SPNY) increased by 1.2% as well. With a 2.6% dip, information technology (.SPLRCT) led the losers and was the index’s worst one-day drop since August 2.
Although claiming to have delivered a record number of electric vehicles in the fourth quarter, exceeding market expectations and hitting its 1.8 million vehicle target for 2023, Tesla (TSLA.O) remained flat. Following Goldman Sachs’ removal of the aerospace firm from its “conviction list,” Boeing (BA.N) saw a 3.4% decline.
Citigroup (C.N) surged 3.1% to $53.04, marking the highest closing price since August 2022, following Wells Fargo’s increase in the bank’s price objective to $70 from $60. In addition, Wells analyst Mike Mayo stated that among big banks, Citi was his top choice for 2024 and that he anticipated the stock to double to $100+ over the following three years.
As bitcoin surged beyond $45,000 for the first time since April 2022, cryptocurrency-related equities including MicroStrategy (MSTR.O) increased due to hopes that exchange-traded spot bitcoin funds will be approved. 11.86 billion shares were traded on US exchanges, below the average of 12.4 billion for the previous 20 trading days.
- Published By Team Genuine Reporter