Stock Market Update: Tech Sell-Off Pressures Markets Amid Rising Bond Yields

Overview of Market Activity

• The S&P 500 fell by 0.3%, and the Nasdaq Composite declined 0.9% as technology stocks continued their downward trend.
• The Dow Jones Industrial Average, buoyed by non-tech sectors like Caterpillar, JPMorgan, and UnitedHealth, outperformed with a 0.6% gain, adding 224 points.

Key Drivers

1. Tech Sell-Off Continues
   • Notable losses in tech:
     • Palantir: Down 3%, extending its 11% loss from last week.
     • Nvidia: Down 3% today, following a 6% drop last week.
     • Tesla and Micron also reported declines.
2. Surging Bond Yields
   • The 10-year Treasury yield climbed to levels not seen since November 2023, driven by a robust jobs report last Friday.
   • Higher bond yields are adding pressure on growth-oriented tech stocks, which are more sensitive to interest rate fluctuations.
3. Federal Reserve Rate Outlook
   • The strong labor market data has reduced expectations for additional rate cuts, with analysts suggesting the rate-cutting cycle may be over.

Earnings Season Begins

Investors are looking to corporate earnings for potential market stabilization:

• Wednesday: Citigroup, Goldman Sachs, and JPMorgan Chase to report earnings.
• Thursday: Results expected from Morgan Stanley and Bank of America.

Sector Performance

• Non-Tech Sectors:
  • Companies like Caterpillar and UnitedHealth saw gains, benefiting from a sector rotation into value stocks.
• Tech Sector:
  • Declines in major players like Meta Platforms, Tesla, and Nvidia continued to weigh on the broader market.

Individual Stock Highlights

1. Moderna
   • Shares plummeted by 20%, marking the worst day in its history after cutting its 2025 revenue guidance to $1.5 billion-$2.5 billion, down from $2.5 billion-$3.5 billion.
2. Pinterest
   • Dropped 3% following a Jefferies downgrade to “hold” due to weaker growth expectations and slower margin expansion.
3. Howard Hughes Holdings
   • Shares jumped 11% after Bill Ackman proposed merging the company with a new Pershing Square subsidiary at $85 per share.
4. U.S. Steel
   • Shares rose following reports of a potential joint bid from Cleveland Cliffs and Nucor.

Economic Data to Watch

• Tuesday: December Producer Price Index (PPI).
• Wednesday: December Consumer Price Index (CPI) to offer insights into inflation trends.

Market Sentiment

• Analysts at Bank of America suggest equities can withstand more inflationary pressures due to the blowout nonfarm payroll data last week.
• While there’s no immediate risk of a bear market, short-term corrections remain likely.

Global Market Impact

1. Asia Markets
   • China Trade Data: Exports grew 10.7% YoY, beating expectations, while imports rose 1% YoY.
   • Hang Seng Index: Dropped below 19,000, its lowest since September 2024.
2. Currency Market
   • The People’s Bank of China pledged support to stabilize the yuan, which strengthened to 7.33 against the dollar.

The U.S. stock market faces continued headwinds from surging bond yields and tech sector sell-offs. As the fourth-quarter earnings season begins, markets may stabilize, but investors remain cautious amid inflation concerns and reduced rate-cut expectations.