NEW YORK: US stocks fell on the first trading session of 2024 after Apple shares dropped on a broker downgrade and Treasury yields climbed as investors tempered expectations around interest-rate cuts this year.
The lackluster start follows a year where Wall Street’s three major indexes notched double-digit gains on the back of optimism around artificial intelligence and stabilizing inflation. The S&P 500 ended last week within 1% of a record closing high reached in early 2022.
However, equities came under pressure on Tuesday as US Treasury yields climbed. The yield on 10-year notes ticked above 4.000% to a two-week high before easing to 3.929%.
Apple fell 2.7% after Barclays downgraded the tech giant to “underweight”, citing weakening iPhone demand. Other megacap stocks including Nvidia and Microsoft shed 2.8% and 1.5%, respectively.
“The losses right now are in tech, which was the biggest winner last year. It’s not shocking that they came down a little,” said Joe Saluzzi, co-manager of trading at Themis Trading.
“What we 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. That rally lasted a little bit too long.” 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 a slew of labor market data are on the roster for this week as market participants look to ascertain the timing of potential rate cuts.
While the Fed is widely 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.
At 11:38 a.m. ET, the Dow Jones Industrial Average was down 13.25 points, or 0.04%, at 37,676.29, the S&P 500 was down 26.72 points, or 0.56%, at 4,743.11, and the Nasdaq Composite was down 203.91 points, or 1.36%, at 14,807.44.
Health stocks outperformed the 10 other S&P 500 sectors, rising 1.4%, while information technology led declines with a 2.3% drop.
Tesla inched up 0.8% as 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 shed 2.6% after Goldman Sachs removed the aerospace company from its “conviction list”.
Crypto-related stocks such as Marathon Digital Holdings and MicroStrategy gained as bitcoin stormed above $45,000 for the first time since April 2022 on optimism around the possible approval of exchange-traded spot bitcoin funds.
Declining issues outnumbered advancers for a 1.24-to-1 ratio on the NYSE and 1.07-to-1 ratio on the Nasdaq.
The S&P index recorded 17 new 52-week highs and no new low, while the Nasdaq recorded 59 new highs and 35 new lows.
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