© Reuters. FILE PHOTO: People walking through the New York Stock Exchange in New York, U.S., December 29, 2023. REUTERS/Eduardo Muñoz/File Photo
By David French
(Reuters) – The y closed the first trading session of 2024 lower, weighed down by a drop in Apple (NASDAQ shares after a broker downgrade and declines among other big tech names triggered by an upward movement in Treasury bond yields.
The lackluster session comes after a year in which Wall Street's three major indexes posted double-digit gains thanks to optimism around artificial intelligence and stabilizing inflation. The S&P 500 finished last week within 1% of a record close reached in early 2022.
However, stocks came under pressure on Tuesday as US Treasury yields rose, with the 10-year bond yield topping 4,000% to a two-week high before falling slightly to 3.937%.
Such a move in Treasury yields reflected investors' tempered expectations for cuts this year in U.S. interest rates. This, in turn, affected growth stocks – including technology stocks – which would benefit from a more favorable rate environment.
Apple fell 3.6% after Barclays downgraded the tech giant to “underweight,” citing weakening iPhone demand. Other mega-cap stocks also fell, including Nvidia (NASDAQ ), Meta Platforms (NASDAQ and Microsoft (NASDAQ ), which fell between 1.4% and 2.7%.
“Everyone was very excited about the final rally, the Fed – at least on the surface – cutting back a little bit, and the fact that we didn't have a recession,” said Jason Pride, head of investment strategy and research at Glenmede. . .
“But does that mean we're out of the woods now? I suspect that even if the Fed gradually lowers rates, monetary policy remains tight and is likely to remain a drag on overall economic activity.”
Minutes from the Federal Reserve's December policy meeting and a host of labor market data are on the docket this week as market participants look to determine the timing of potential rate cuts.
While the Federal Reserve is seen holding rates at its January meeting, traders expect a near 70% chance of a 25 basis point cut in March, according to the CME Group's FedWatch tool (NASDAQ .
The S&P 500 lost 27 points, or 0.57%, to finish at 4,742.83 points, while the Nasdaq Composite lost 245.41 points, or 1.63%, to 14,765.94. The Dow Jones Industrial Average rose 25.5 points, or 0.07%, to 37,715.04.
S&P 500 sectors were mixed. The healthcare sector was the best performer, with a 1.8% gain that took it to its highest close since mid-December 2022. Modern (NASDAQ:) The 13.1% advance propelled the sector higher after brokerage Oppenheimer upgraded the vaccine maker, and reiterated the company's goal of achieving sales growth in 2025.
The energy index also rose 1.2% despite the drop in crude oil due to concerns about the economic outlook. (EITHER)
Information technology led the declines with a 2.6% drop, the index's biggest one-day drop since Aug. 2.
Tesla (NASDAQ ) held steady despite saying it delivered a record number of electric vehicles in the fourth quarter, beating market estimates and meeting its 2023 goal of 1.8 million vehicles.
Boeing (NYSE:) fell 3.4% after Goldman Sachs removed the aerospace company from its “condemnation list.”
Meanwhile, Citigroup advanced 3.1% to $53.04, its highest close since August 2022, 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 expects the stock to double to more than $100 over the next three years.
Cryptocurrency-related stocks such as MicroStrategy gained as bitcoin surpassed $45,000 for the first time since April 2022 on optimism around the potential approval of exchange-traded spot bitcoin funds.
Volume on US exchanges was 11.86 billion shares, compared to the average of 12.4 billion over the last 20 trading days.
