Wall Street Stocks Under Pressure After Investors Dialed Back Rate-cut Enthusiasm

Barry Adams
03 Jan, 2024
New York City

Stocks were under pressure for the second day this week, and investors curbed their enthusiasm for rate cuts amid economic uncertainties and elevated inflation.

The S&P 500 index and the Nasdaq Composite declined for the second day in a row, and Treasury yields edged slightly higher.

Tech stocks led the decliners after AI-driven, cloud computing, and cyber security stocks traded down on valuation worries following the surge in 2023.

Investors also dialed down rate-cut optimism and sold tech winners in 2023 after the 10-year Treasury yield approached 4%.

Market participants are worried that the Federal Reserve may not lower rates as early as March, despite the steady decline in inflation over the last ten months.

Labor market conditions remain tight, supporting wage gains that are not consistent with the Fed's goal of lowering inflation to 2%.

Investors are awaiting the release of the Fed's December meeting minutes, the job opening report for November, and ISM's manufacturing industry survey for December.

 

U.S. Indexes and Yields

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 0.5% to 4,718.48, and the Nasdaq Composite dropped 0.6% to 14,679.88.

The yield on 2-year Treasury notes increased to 4.34%, 10-year Treasury notes inched higher to 3.96%, and 30-year Treasury bonds eased to 4.11%.

WTI crude oil increased $0.51 to $70.89 a barrel, and natural gas prices decreased 3 cents to $2.60 a thermal unit.

Gold decreased $15.70 to $2,043.34 an ounce, and the yellow metal price traded down for the second day after investors dialed back rate-cut optimism.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 102.43.

 

U.S. Stock Movers

PGT Innovations increased 3.5% to $41.70 after the window and door maker received an unsolicited offer from Miter Brands for $41.50 a share.

PGT agreed to a $41 per share offer from Masonite International on December 18.

Bloomin' Brands increased 2.6% to $28.01 after the owner of Outback Steakhouse added two board members, as agreed with activist investor Starboard Value.

Walt Disney decreased 0.03% to $90.66, and activist investor ValueAct Capital agreed to support the company's latest slate of board members, giving the management a leg up against activist investor Trian Partners.

Cryptocurrency-focused stocks traded down after Bitcoin declined 5.5% to $42,395.60.

Marathon Digital Holdings dropped 10.5% to $20.58, and Coinbase Global declined 7.5% to $146.0.

Apple declined 0.7% to $184.09 and extended its loss for the second day after falling 3.6% in the previous session following a downgrade by Barclays analysts.

BYD Class H shares in New York traded down 2.5% to $26.85 despite the company ramping up sales of its new energy vehicles in 2023 to 3 million.

BYD produced 1.6 million battery-powered passenger cars and 1.4 million hybrid cars.

Tesla still leads the battery-powered vehicle segment with 1.8 million vehicles in 2023.