2024-01-02 21:53:21
Photo of a man walking near the New York Stock Exchange building
par David French
The New York Stock Exchange ended in mixed order on Tuesday, with only the Dow Jones registering slightly in the green during this first session of the year, while Apple and other major technology stocks fell in parallel with the rise in bond yields.
The Dow Jones index gained 0.07%, or 25.50 points, to 37,715.04 points.
The broader S&P-500 lost 27 points, or 0.57%, to 4,742.83 points.
The Nasdaq Composite fell 245.41 points (1.63%) to 14,765.94 points.
The gloomy session marks a contrast with the past year, when major Wall Street indexes posted double-digit gains amid enthusiasm regarding artificial intelligence (AI) and optimism regarding regard to inflation.
While the S&P-500 had moved closer to its closing record at the end of last week, established at the start of 2022, the indices were put under pressure by the rise in the yield on US Treasury bonds, with the ten-year establishing itself in session above 4.0% before ending at 3.937%.
This increase in bond yields illustrates the tempered expectations of investors regarding the fall in interest rates in the United States over the coming year. It mainly affects high-growth stocks, such as “tech”, which traditionally benefit from a more flexible monetary policy.
Traders are expecting the Federal Reserve (Fed) to cut rates by 25 basis points in March, following the US central bank indicated in December that its monetary tightening cycle was coming to an end and signaled a rate cut in 2024.
Investors are awaiting the publication this week of the minutes of the latest Fed meeting, hoping to have clues on the timing of potential rate cuts. Data on the American labor market must also be communicated.
“Everyone was very excited regarding the end-of-year hike, the Fed seeming to be more dovish, and the fact that we didn’t have a recession,” said Jason Pride, chief investment officer at Glenmede. .
“But does this mean that the difficulties are behind us? I think that (…) monetary policy remains tight and should still constitute a hindrance to economic activity as a whole,” he said .
Among the major sectors of the S&P-500, health care rose 1.8% in the wake of Moderna’s jump. Energy also ended up 1.2% despite the decline in oil prices. Information technology showed the biggest decline (2.6%).
On the value side, Apple fell 3.6% following Barclays downgraded its recommendation for the Apple firm to “underperformance”, citing weakening demand for iPhones. Other high-growth stocks, such as Nvidia, Meta Platforms and Microsoft, declined.
Citigroup stood at a record high since August 2022, rising 3.1% to $53.04, following Wells Fargo raised the price target for the bank.
(French version Jean Terzian)
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