Stocks closed with mixed results on Monday as investors faced volatility with rising bond yields and a stronger dollar. Hopes for interest rate cuts faded ahead of key inflation reports this week, and Big Tech companies saw their losses narrow.
The S&P 500 finished nearly 0.2% higher, recovering from a 1% drop earlier in the session. The Nasdaq Composite, however, ended the day down 0.4%. Nvidia (NVDA) and Apple (AAPL) managed to close off their session lows, but most of the “Magnificent Seven” tech giants experienced losses throughout the day.
In contrast, the Dow Jones Industrial Average, which has fewer tech stocks, gained 0.8%, or over 350 points.
Market Volatility Continues After Friday’s Sell-Off
Stocks were once again volatile following Friday’s sharp decline, which wiped out the year-to-date gains of major US indices. The sell-off was triggered by a stronger-than-expected December jobs report, which raised concerns that economic strength could lead the Federal Reserve to maintain higher interest rates for an extended period.
Treasury Yields and Dollar Surge
The 10-year Treasury yield continued its upward trajectory, reaching a 14-month high of around 4.8%, following a sell-off in US bonds. Meanwhile, the US dollar surged to a two-year high against other major currencies, putting pressure on the British pound.
Market expectations are that the Federal Reserve won’t cut interest rates until at least September, according to the CME FedWatch tool. Furthermore, traders anticipate that the Fed will lower borrowing costs by just 30 basis points in all of 2025.
Inflation Focus Ahead of Key Data
The upcoming Consumer Price Index (CPI) report for December, due Wednesday, has drawn significant attention. Markets are concerned that inflation may not decrease enough to meet the Fed’s 2% target, which could influence future rate decisions.
Oil Prices Surge Amid Sanctions on Russia
Oil prices climbed to their highest levels in five months before pulling back. Brent crude rose to $81.01 per barrel, while West Texas Intermediate (WTI) settled at $78.82. The increase followed the US imposing stricter sanctions on Russia’s oil industry, which could disrupt supplies to China and India.
Corporate News: Moderna’s Struggles
Moderna (MRNA) saw a sharp 16% drop in its stock price after the biotech company lowered its 2025 sales forecast by $1 billion. The revised outlook was due to weaker-than-expected demand for its COVID-19 vaccines.
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