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The Dow Jones ended 150 points lower but declined over 500 points from the highs of the day. The S&P 500 and the Nasdaq fell 0.2% each, extending their losing streak to five straight sessions, the longest since April last year.
Tech stocks were under pressure with Tesla seeing a 6% drop after annual deliveries declined for the first time in over a decade since 2024. Apple shares too saw a 2.5% drop. Nvidia and Meta looked to offset the losses seen in Apple and Tesla.
Treasury yields steadied following a choppy session. The rate on the benchmark 10-year was nearly 20 basis points above the level prior to Jerome Powell’s hawkish turn at a December 18 Federal Reserve meeting. Higher rates may make fixed income an attractive alternative to investors worried about the valuation of the stock market.
Big moves have proliferated across asset classes after Powell’s board expressed waning enthusiasm for interest-rate cuts. The Cboe Volatility Index climbed for the fourth time in five days.
For corporate earnings, 2025 will be a “show-me year,” according to Lisa Shalett at Morgan Stanley Wealth Management, who warned that the dominance of the Magnificent Seven — the big technology stocks responsible for the bulk of last year’s gains — was teetering. “This idea that they as a group can trade together and lead the market may falter in 2025,” she said. It’s a call echoed by others on Wall Street, including Bank of America Corp.’s Savita Subramanian.
Treasuries erased gains after a reading of weekly jobless claims fell to an eight-month low. A Bloomberg gauge of the dollar’s strength traded at a more than two-year peak.
Goldman Sachs economists led by Jan Hatzius noted that “seasonal adjustment challenges can make jobless claims readings particularly volatile around the holiday season.”
CBOE’s gauge of Wall Street stock sentiment, the VIX, touched 19. Readings above 20 indicate mounting concern over near-term volatility.
On Friday, investors will be watching the House speaker vote to see if Mike Johnson will retain his position. GOP squabbling over his re-election could bode ill for the president-elect’s agenda, according to Tom Essaye, founder of the Sevens report.
If Johnson’s confirmation takes several rounds of voting over several days, “that will be a bad sign for Republican unity and hopes for quick action on pro-growth policies will take a hit,” he wrote.
In the months to come, the growth outlook in Europe and China, the Federal Reserve’s policy path and Trump’s ability to execute on his campaign promises will be among the most pressing items on traders’ radars.
Gold rose, trading around $2,657 an ounce. Bitcoin extended its rally to a third day.
(With Inputs From Agencies.)
