Weak Tech Stocks Drag Nasdaq Down 1.8%, Crude Oil In Focus

Barry Adams
02 Jan, 2024
New York City

Stocks fell sharply on Wall Street on the first day of trading in the new year, and Treasury yields edged slightly higher.

The tech-heavy Nasdaq Composite index dropped as much as 1.8% after mega-cap tech stocks eased following a surge in 2023.

Apple Inc. dropped as much as 3%, Microsoft declined 3%, Amazon fell 1.6%, and Meta Platforms decreased 2.6%.

Stocks staged a strong recovery in 2023, powered by the rally in tech stocks in the fourth quarter. 

The S&P 500 index and the Nasdaq Composite gained for nine consecutive weeks in a row in the hopes that the Federal Reserve is more likely to lower rates before March. 

The broad rally lifted the S&P 500 index by 24% and the Nasdaq Composite by 44% in 2023, surprising many market analysts.

The surge in market indexes in 2023 has only increased the price-to-earnings multiple of stocks, reflecting slower earnings growth across many industries.

Despite the steady decline in overall inflation in the last nine months, prices are still rising at the faster pace than preferred by policymakers, raising the prospects of interest rates staying higher for longer in 2024.

In today's trading oil complex, stocks rose amid rising tensions in the Middle East and attacks on merchant ships in the Red Seas.

 

U.S. Indexes and Yields

In December, the S&P 500 advanced 4.7% and the Nasdaq Composite gained 6.1%, and in the fourth quarter, the indexes gained 11.6% and 14.2%, respectively.

The Nasdaq index was up 44.2% in 2023 before Friday's trading, its best annual gain since 2003.

The S&P 500 index decreased 0.8% to 4,733.50, and the Nasdaq Composite decreased 1.7% to 14,763.38.

The yield on 2-year Treasury notes increased to 4.32%, 10-year Treasury notes inched higher to 3.92%, and 30-year Treasury bonds eased to 4.06%.

WTI crude oil decreased $0.27 to $71.37 a barrel, and natural gas prices decreased 9 cents to $2.57 a thermal unit.

Gold decreased $5.11 to $2,068.22 an ounce, and the yellow metal price rose 13% in 2023.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 102.08.

 

U.S. Stock Movers

Tesla increased 0.03% to $248.57, and the electric vehicle maker shipped more than expected vehicles in the fourth quarter.

Vehicle shipments in the fourth quarter increased to 484,507, increasing the total for 2023 to 1,808,581.

Tesla shipped 405,278 electric vehicles in the fourth quarter of 2022 and delivered 1,313,851 in 2022.

Tech stocks were on the defensive after Barclays analyst Tim Long downgraded Apple Inc., citing weakening unit sales of iPhones, iPads, Macs, and wearable devices.

Apple declined 3.2% to $186.43 following the stock downgrade, which dragged down other leading tech companies.

Microsoft fell 1.9% to $368.87, Amazon.com decreased $148.90, and Meta dropped 3.3% to $342.10.