Wall Street starts 2024 on a lackluster note with rising yields and Apple’s decline
January 2, 2024 – 7:26 AM PST
(Reuters) – U.S. stocks took a hit on the first trading day of 2024 as Apple shares dipped following a broker downgrade, while Treasury yields rose as investors adjusted their expectations for interest-rate cuts this year.
Wall Street’s three major indexes achieved monthly, quarterly, and annual gains on Friday as traders factored in the likelihood of rate cuts from the Federal Reserve this year. The S&P 500 finished last week just 1% below its record closing high reached on Jan. 3, 2022.
However, equities faced pressure on Tuesday as the yield on 10-year U.S. Treasury notes, the benchmark for global borrowing costs, briefly surpassed 4.0000% to reach a two-week high before easing to 3.9388%.
Megacap stocks, including Nvidia (NVDA.O) and Microsoft (MSFT.O), experienced declines of 3.5% and 1.7%, respectively. Apple (AAPL.O) fell 3.3% after Barclays downgraded the tech giant to “underweight,” citing weaker iPhone demand.
“It’s day one after a tremendous run. When you think about what happened from the October lows to now, I would expect the first three months of this year to be tough and this week to be somewhat exemplary of that, with people taking profits, realigning portfolios,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
“It’s going to be about interest rates in these first few days of the year.”
The CBOE Volatility index (.VIX), also known as Wall Street’s fear gauge, reached a near two-week high at 14.23 points.
At 9:45 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 70.22 points, or 0.19%, at 37,619.32, the S&P 500 (.SPX) was down 34.90 points, or 0.73%, at 4,734.93, and the Nasdaq Composite (.IXIC) was down 224.07 points, or 1.49%, at 14,787.29.
Health stocks (.SPXHC) outperformed the 10 other S&P 500 sectors, rising 1%, while information technology (.SPLRCT) led declines with a 2.5% drop.
After optimism surrounding artificial intelligence and stabilizing interest rates fueled U.S. stocks in 2023, further market gains will be tested by upcoming inflation data and the looming presidential elections.
The week’s agenda includes weekly jobless claims, monthly private and non-farm payrolls data, as well as services sector data. On Tuesday, S&P Global’s final reading of U.S. manufacturing activity for December came in at 47.9, compared with earlier estimates of 48.2.
Market participants are also eagerly awaiting the release of the Fed’s December policy meeting minutes on Wednesday to gain insight into the potential timing of rate cuts.
While the Fed is widely expected to hold rates steady at its January meeting, traders anticipate a nearly 70% chance of a 25-basis point cut in March, according to the CME Group’s FedWatch tool.
Companies linked to cryptocurrencies saw gains as bitcoin surged above $45,000 for the first time since April 2022, driven by optimism surrounding the possible approval of exchange-traded spot bitcoin funds.
Marathon Digital Holdings (MARA.O) and MicroStrategy (MSTR.O) experienced jumps of 8.9% and 13%, respectively.
Boeing (BA.N) declined by 1.4% after Goldman Sachs removed the aerospace company from its “conviction list.”
Declining issues outnumbered advancers with a ratio of 1.81-to-1 on the NYSE and 1.61-to-1 on the Nasdaq.
The S&P index recorded 10 new 52-week highs and no new lows, while the Nasdaq recorded 27 new highs and 15 new lows.
Reporting by Sruthi Shankar and Shristi Achar A in Bengaluru; Editing by Devika Syamnath
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How did the broker downgrade of Apple impact the stock market
U.S. Stocks Dip as Apple Shares Decline on Broker Downgrade
January 2, 2024 – 7:26 AM PST
(Reuters) – U.S. stocks faced a decline on the first trading day of 2024 as Apple shares dipped following a broker downgrade, while Treasury yields rose as investors adjusted their expectations for interest-rate cuts this year.
Wall Street’s three major indexes achieved monthly, quarterly, and annual gains on Friday as traders factored in the likelihood of rate cuts from the Federal Reserve this year. The S&P 500 finished last week just 1% below its record closing high reached on January 3, 2022.
However, equities faced pressure on Tuesday as the yield on 10-year U.S. Treasury notes, the benchmark for global borrowing costs, briefly surpassed 4.0000% to reach a two-week high before easing to 3.9388%.
Megacap stocks, including Nvidia and Microsoft, experienced declines of 3.5% and 1.7%, respectively. Apple fell 3.3% after Barclays downgraded the tech giant to “underweight,” citing weaker iPhone demand.
“It’s day one after a tremendous run. When you think about what happened from the October lows to now, I would expect the first three months of this year to be tough and this week to be somewhat exemplary of that, with people taking profits, realigning portfolios,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
“It’s going to be about interest rates in these first few days of the year.”
The CBOE Volatility index, also known as Wall Street’s fear gauge, reached a near two-week high at 14.23 points.
At 9:45 a.m. ET, the Dow Jones Industrial Average was down 70.22 points, or 0.19%, at 37,619.32, the S&P 500 was down 34.90 points, or 0.73%, at 4,734.93, and the Nasdaq Composite was down 224.07 points, or 1.49%, at 14,787.29.
Health stocks outperformed the 10 other S&P 500 sectors, rising 1%, while information technology led declines with a 2.5% drop.
After optimism surrounding artificial intelligence and stabilizing interest rates fueled U.S. stocks in 2023, further market gains will be tested by upcoming inflation data and the looming presidential elections.
The week’s agenda includes weekly jobless claims, monthly private and non-farm payrolls data, as well as services sector data. On Tuesday, S&P Global’s final reading of U.S. manufacturing activity for December came in at 47.9, compared with earlier estimates of 48.2.
Market participants are also eagerly awaiting the release of the Fed’s December policy meeting minutes on Wednesday to gain insight into the potential timing of rate cuts.
While the Fed is widely expected to hold rates steady at its January meeting, traders anticipate a nearly 70% chance of a 25-basis point cut in March, according to the CME Group’s FedWatch tool.
Companies linked to cryptocurrencies saw gains as bitcoin surged above $45,000 for the first time since April 2022, driven by optimism surrounding the possible approval of exchange-traded spot bitcoin funds.
Marathon Digital Holdings and MicroStrategy experienced jumps of 8.9% and 13%, respectively.
Boeing declined by 1.4% after Goldman Sachs removed the aerospace company from its ”conviction list.”
Declining issues outnumbered advancers with a ratio of 1.81-to-1 on the NYSE and 1.61-to-1 on the Nasdaq.
The S&P index recorded 10 new 52-week highs and no new lows, while the Nasdaq recorded 27 new highs and 15 new lows.
Reporting by Sruthi Shankar and Shristi Achar
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