Stock Market Recap: S&P 500 and Nasdaq Fall, Apple Downgraded, and Interest Rate Expectations

2024-01-02 19:19:53

The S&P 500 and Nasdaq Composite fell in the first session of 2024, weighed down by a decline in Apple stock following a brokerage downgrade and a brief rise in Treasury yields, the investors having tempered their expectations regarding interest rate cuts.

The lackluster start follows a year in which Wall Street’s three major indexes posted double-digit gains on optimism about artificial intelligence and stabilizing inflation. The S&P 500 ended last week less than 1% from a closing record set at the start of 2022.

However, stocks came under pressure on Tuesday as US Treasury yields rose. The yield on 10-year bonds rose above 4.000% to reach its highest level in two weeks, before falling back to 3.95%.

Apple fell 4% after Barclays downgraded the tech giant to “underweight”, citing weakening iPhone demand. Other large-cap stocks, such as Nvidia, Meta Platforms and Microsoft, lost between 1.8% and 3%.

“The losses right now are in the technology sector, which was the biggest gainer last year. It’s not surprising that they’ve come down a bit,” said Joe Saluzzi, co-managing partner of Themis Trading.

“What we saw in December was kind of a sloppy rally where people seemed to want to put things in their books or cover short positions. That rally lasted a little too long.”

The S&P 500, Dow and Nasdaq posted nine consecutive weekly gains on Friday – the longest streak of weekly gains for the S&P 500 since January 2004, and the longest for the Dow and Nasdaq since early 2019.

Minutes from the Fed’s December meeting and a series of labor market data are on the agenda this week, as market participants seek to determine the timing of possible rate cuts.

While the Fed is widely seen as holding rates at its January meeting, traders expect a nearly 70% chance of a 25 basis point cut in March, according to the CME’s FedWatch tool Group.

At 1:54 p.m. ET, the Dow Jones Industrial Average was up 30.21 points, or 0.08%, at 37,719.75, the S&P 500 was down 27.88 points, or 0.58%. at 4,741.95, and the Nasdaq Composite was down 250.64 points, or 1.67%, at 14,760.71.

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Healthcare stocks were among the best performers in the S&P 500, rising 1.7% to the index’s highest level in a year. The energy sector was also a major gainer, rising 1.6%, despite the drop in crude oil prices due to concerns about the economic outlook.

Information technology was responsible for a 2.8% decline.

Tesla has been treading water, although it said it delivered a record number of electric vehicles in the fourth quarter, beating market estimates and meeting its 2023 target of 1.8 million vehicles.

Boeing lost 3.2% after Goldman Sachs removed the aerospace company from its “conviction list.”

Meanwhile, Citigroup hit an 11-month high, rising 3.1% to $53, after Wells Fargo raised its price target for the bank to $70 from $60. Wells analyst Mike Mayo also said Citi was his top pick among big banks in 2024, and he expected the stock to double to over $100 over the next three years.

Cryptocurrency-related stocks such as Marathon Digital Holdings and MicroStrategy rose as bitcoin surpassed $45,000 for the first time since April 2022 on optimism over the possible approval of bitcoin-traded funds. sotck exchange.

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