Wall Street begins 2024 down on surging yields rise

The first trading session of 2024 saw a decline in the US stock market as investors lowered their expectations for interest rate cut this year. Tuesday’s drop in Apple shares is due to a downgrade by Barclays. Tesla continues to deliver record numbers in Q4. The drab beginning comes after a year in which the three main Wall Street indexes posted double-digit increases on hopes for stabilizing inflation and artificial intelligence.

The S&P 500 closed last week only 1% shy of the all-time high that was set in the early months of 2022. Nonetheless, Tuesday’s increase in Treasury yields put pressure on stocks. The yield on 10-year notes eased to 3.929% after peaking at little above 4.000% for a fortnight.

Following Barclays’ downgrade of the tech giant to “underweight” due to declining iPhone demand, Apple saw a 2.7% decline. Nvidia and Microsoft, two other Megacap companies, fell 2.8% and 1.5%, respectively.

Technology, which was the largest winner last year, is currently losing. The fact that they somewhat decreased is not shocking. What markets saw in December was kind of a sloppy rally where people seem to be wanting to put things on their books maybe or cover shorts. It was a tad too long of a rally.

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

The Fed’s December policy meeting minutes and labour market data are expected to influence potential rate cuts. Traders predict a 70% chance of a 25-basis point cut in March.

The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all fell, with health stocks rising 1.4% and information technology leading declines by 2.3%. Tesla delivered a record number of electric vehicles in the fourth quarter, meeting its 2023 target of 1.8 million vehicles. Boeing shed 2.6% after Goldman Sachs removed the aerospace company from its conviction list.

Crypto-related stocks like Marathon Digital Holdings and MicroStrategy gained as bitcoin surged above $45,000 for the first time since April 2022. Declining issues outnumbered advancers, with the S&P index recording 17 new 52-week highs and no new lows, and the Nasdaq recording 59 new highs and 35 new lows.