U.S. stock futures slid on Monday as key tech stocks took a hit.
An hour after the releases of the US jobs report, the yield on the 10-year US government bond has settled in the 4.75% area while the 30-year is flirting with 5%. The less liquid 20-year is trading at 5.04%.
Meanwhile, and consistent with the move at the short-end of the curve,… pic.twitter.com/H9Kbp0XG0M— Mohamed A. El-Erian (@elerianm) January 10, 2025
The Nasdaq futures dropped more than 1%, shedding 0.9%, while futures tied to the Dow lost 36 points, or 0.1%. Major benchmarks have been down for the last two weeks, with tech shares causing most of the decline.
Stronger than expected payrolls on Friday pushed bond yields higher across yield curve and equities lower across capitalization spectrum; every @SPDJIndices U.S. equity index in red YTD, ranging from –0.7% for S&P MidCap 400 to -1.8% for S&P SmallCap 600 pic.twitter.com/yHOL4ViQWs
— Liz Ann Sonders (@LizAnnSonders) January 13, 2025
Palantir and Nvidia, two of the bull market leaders popular with retail investors, each shed around 3% in premarket trading. Other tech shares, including Tesla, Broadcom, and Micron, were also down. Surging bond yields have been a catalyst for the sell-off in growth-oriented shares.
On Monday, the 10-year Treasury yield touched its highest level since late 2023.
Slightly more than a third of S&P 500 members are at a new two-month low pic.twitter.com/3mVrnqMnzW
— Liz Ann Sonders (@LizAnnSonders) January 13, 2025
“With current inflation and inflation expectations elevated and sticky, and with bond yields rising sharply and quickly, equity investors are becoming more cautious,” said Katherine Nixon, chief investment officer for wealth management at Northern Trust. A better-than-expected jobs report on Friday spiked yields and sent stocks reeling by casting doubt on further interest rate cuts by the Federal Reserve.
The Dow lost 697 points on Friday. All three major indexes are now in the red for the year. Investors are hoping that the start of the fourth-quarter earnings season will stabilize markets.
Stock Market LIVE: Sensex starts 750 down, Nifty below 23200; India VIX spikes 8%https://t.co/1Ox9D1PvsN
— ET NOW (@ETNOWlive) January 13, 2025
Tech stocks tumble amid rising yields
Banks, including JPMorgan and Citigroup, report earnings on Wednesday, while Delta Air Lines will post results on Thursday. Key economic data this week includes the December consumer price index on Wednesday morning.
Before that, investors will analyze wholesale inflation with December’s producer price index report on Tuesday. In other market news, shares of clothing retailer Abercrombie & Fitch plunged 11% in premarket trading despite strong holiday sales expectations. Pinterest shares slid 3% following a downgrade by Jefferies.
However, shares of real estate developer Howard Hughes Corp. jumped 9% after Bill Ackman’s Pershing Square proposed forming a new subsidiary that would merge with the company. Barclays also dialed back its optimism on small cap stocks, downgrading its outlook to neutral from positive due to rising yields.
In corporate news, Johnson & Johnson announced it will acquire Intra-Cellular Therapies for $14.6 billion. Shares of Intra-Cellular soared 35.5% on the news. Asia markets fell Monday as traders assessed the U.S. jobs report and China trade data.
Mainland China’s benchmark CSI 300 extended losses, while Hong Kong’s Hang Seng Index was also down. China’s central bank pledged to enhance the management of the foreign exchange market and prevent any risk of yuan “overshooting” during a meeting held in Beijing.
