Market Update: Stocks Slip as Technology and Chip Sectors Struggle
The S&P 500 Index ($SPX) (SPY) has dipped by -0.11%, while the Dow Jones Industrials Index ($DOWI) (DIA) has fallen by -0.77%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.36%. Furthermore, March E-mini S&P futures (ESH25) and March E-mini Nasdaq futures (NQH25) are also down by -0.19% and -0.15%, respectively.
Technology Weakness Drives Market Decline
Today’s trading session has seen stocks edge lower, with the S&P 500, Dow, and Nasdaq all reaching one-week lows. A downturn in major technology stocks has contributed significantly to this trend. Additionally, chip stocks are experiencing a sell-off, further impacting the market. Concerns escalated for Boeing as shares dropped over -3% following a tragic crash involving a 737-800 aircraft at Muan International Airport in South Korea. Market participants are also engaging in year-end profit-taking since Tuesday marks the final trading day of 2024. On a brighter note, energy stocks have gained traction thanks to a rally in WTI crude oil, reaching a two-week high.
Low Trading Volumes and Upcoming Economic Data
Trading volumes remain low amid the holiday season, suggesting potential for amplified stock movements as many global markets will be closed on Wednesday for New Year’s Day. Investors are keenly awaiting the release of Friday’s US manufacturing data, specifically the December ISM manufacturing index, which is projected to marginally decrease by -0.2, down to 48.2.
Currently, the markets are placing an 11% likelihood on a -25 basis point rate cut during the upcoming FOMC meeting scheduled for January 28-29.
Global Markets Experience Mixed Results
Internationally, stock markets are mixed. The Euro Stoxx 50 has declined by -0.58% after briefly reaching a one-week high. Meanwhile, China’s Shanghai Composite Index finished up +0.21%, and Japan’s Nikkei Stock 225 saw a decrease of -0.96%.
Interest Rates Trending Downward
March 10-year T-notes (ZNH25) have increased +15 ticks, leading to a -8.3 basis point drop in the 10-year T-note yield, now at 4.543%. The dip in equity markets has driven investors toward safe-haven T-notes, further supported by month-end rebalancing as bond managers adjust their portfolios. Bloomberg forecasts a duration extension of bond indexes by an estimated 0.07 years this month.
European government bond yields are also on the decline. The yield on Germany’s 10-year bund has fallen from a six-week high of 2.404% to 2.376%, while the UK gilt yield decreased from a one-week high of 4.646% to 4.612%.
Inflation Concerns in Europe
In Spain, the December consumer price index (CPI) rose +2.8% year-on-year, surpassing expectations of +2.6%, marking the largest increase in five months. Furthermore, core CPI also showed strength, climbing +2.6% year-on-year, above the anticipated +2.4%.
Comments from ECB Governing Council member Holzmann indicated that interest rate adjustments might be delayed if inflationary pressures from energy costs or euro depreciation persist. Market swaps are pricing in a 100% chance of a -25 basis point rate cut at the ECB’s policy meeting on January 30 and a 12% chance for a steeper -50 basis point cut.
Technology Stocks Strain the Market
Major technology stocks face downward pressure today, pulling the broader market down. Notable declines include Tesla (TSLA) and Meta Platforms (META), each down more than -2%. Other tech giants, including Microsoft (MSFT), Amazon.com (AMZN), Alphabet (GOOGL), and Apple (AAPL), have seen declines exceeding -1%.
Chip-related stocks are also struggling, with Broadcom (AVGO) and Marvell Technology (MRVL) dropping over -3%. Other major players like Micron Technology (MU), Applied Materials (AMAT), ASML Holding NV (ASML), and GlobalFoundries (GFS) were down more than -2%. Advanced Micro Devices (AMD), Microchip Technology (MCHP), Lam Research (LRCX), NXP Semiconductors NV (NXPI), and ON Semiconductor (ON) faced declines between -1% and -1%.
Boeing (BA) leads the day’s losses, falling more than -3% following the aircraft crash incident. Moreover, Axsome Therapeutics (AXSM) slid over -6% after its AXS-05 Alzheimer’s treatment did not meet primary trial endpoints. MicroStrategy (MSTR) dropped more than -4%, with Bitcoin also down by more than -1%, despite announcing a $209 million Bitcoin purchase last week.
Energy stocks have seen an upswing, with Coterra Energy (CTRA) rising over +1% and Devon Energy (DVN) up +0.64%. Diamondback Energy (FANG) gained +0.10%, leading the Nasdaq 100 in gains.
V2X Inc (VVX) recorded a +0.52% rise after securing a $170 million contract to support the DEA’s fleet.
Earnings Reports
Upcoming earnings reports include Gencor Industries Inc (GENC) and Renovaro Inc (RENB).
On the date of publication, Rich Asplund did not hold any positions in the securities mentioned in this article. This article is for informational purposes only. For details, please review the Barchart Disclosure Policy here.
The views expressed are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.
