The U.S. stock market today got off to a tepid start to 2024 as investor sentiment was hit by a combination of factors, including rising Treasury yields and Apple’s (NASDAQ: $185.64) downgrade. Although 2023 ended with gains, Wall Street’s major indexes faced early pressure in the new year. Stocks yielded more than 4.0000%, a two-week high, dampening enthusiasm for stocks and prompting a reassessment of expectations for a rate cut by the Federal Reserve.
Shares of Apple ( AAPL ) fell 3.3% after Barclays ( BCS ) downgraded its rating to “underweight” on expected weaker demand for iPhones. The decline contributed significantly to the broader market decline, with other mega-cap stocks such as Nvidia (NASDAQ: $481.68) and Microsoft (NASDAQ: $370.87) also posting significant losses of 3.5% and 1.7%, respectively. Phil Blancato, CEO of Ladenburg Thalmann Asset Management, pointed out that this could be a period of regrouping and profit-taking after a strong recovery from the previous year’s lows.
Market Overview
- US stocks fell on the first trading day of 2024 under pressure from rising Treasury yields and profit-taking. Broad indexes retreated: Dow Jones (0.19%), S&P 500 (0.73%), Nasdaq (1.49%). Megacap tech stocks led decliners: Nvidia (3.5%), Microsoft (1.7%), Apple (3.3% after Barclays downgrade).
- Healthcare outperformed while technology suffered the most.
Key Points
- Bitcoin rises above $45,000 for the first time since April 2022.
- boosting crypto-related stocks: Marathon Digital (NASDAQ: $22.93), MicroStrategy (NASDAQ: $685.15),(8%).
- Investors are cautious despite a strong 2023 driven by AI optimism and easing interest rates.
- Economic data releases, Fed minutes, and the presidential election are seen as potential market catalysts in the coming months.
Looking ahead
- Weekly jobless claims, wage data, and services sector data in a weekly overview.
- Minutes from the Fed’s December meeting, due to be released on Wednesday, are being scrutinized for signs of a possible rate cut.
- Traders expect a nearly 70% chance of a 25-basis-point rate cut in March, according to CME Group’s (NASDAQ) FedWatch tool.
Healthcare stocks ( XLV ) bucked the trend with a 1% gain, while information technology stocks ( XLK ) led the decline with a 2.5% decline. The volatility index also rose, indicating heightened investor concern.
Looking ahead, the market will focus on upcoming economic data, including jobless claims and non-farm payrolls, as well as Fed meeting minutes, which could provide insight into future rate decisions. Traders currently expect a high probability of a rate cut in March.
Crypto-linked companies such as Marathon Digital Holdings ( MARA ) and MicroStrategy ( MSTR ) posted gains amid a surge in price, while Boeing ( NYSE) faced declines after being removed from Goldman Sachs’ ( GS ) doom list.