4:18pm: Strong jobs report keeps investors on edge
Stocks closed mixed on Monday after the market was digesting the unexpectedly strong December jobs report, which raised doubts about the likelihood of interest rate cuts in 2025.
At the close, the Dow had gained 377 points (0.9%) to 42,297, while the Nasdaq dropped 0.4% to 19,088. The S&P 500 edged up 0.2% to 5,836.
Treasury yields rose, with the 10-year yield hitting 7.78%, amid concerns about the Federal Reserve's interest rate moves, following a strong December jobs report that cast doubt on potential rate cuts in 2025.
Technology stocks, including Nvidia and Tesla, faced pressure, while energy stocks gained strength due to rising oil prices.
Investors are focused on key inflation reports later in the week, including the December CPI and PPI, which could influence future Fed decisions.
2:05pm: Stocks making moves
Nvidia shares traded down 2.8% at $132 after the Biden administration unveiled plans to further limit exports of AI chips and technology.
"This sweeping overreach would impose bureaucratic control over how America's leading semiconductors, computers, systems and even software are designed and marketed globally,” Nvidia vice president of government affairs Ned Finkle wrote in a blog post.
Meanwhile, Moderna slumped almost 20% after it pre-announced fiscal 2024 sales below expectations.
The company expects sales of $3 billion to $3.1 billion, below the Street consensus of $3.3 billion.
On the flip side, Sage Therapeutics oared after the firm announced that it had received an unsolicited takeover bid from Biogen.
Biogen has proposed to acquire all of Sage’s shares that it does not already own for $7.22 per share.
Voyageur Pharmaceuticals added 7% after it announced that it has commenced human testing of its barium contrast product line, marking a key step toward its anticipated market launch later this year.
12:20pm: Treasury yields climb
Stocks are mixed in midday trading as investors digest recent economic data and prepare for upcoming inflation reports and bank earnings later this week.
The Dow is up 0.4%, defying the trend seen in other indices. Meanwhile, the S&P 500 is down 0.4%, and the tech-heavy Nasdaq is experiencing a steeper decline of 1%.
The market's performance reflects ongoing concerns about the Federal Reserve's future interest rate decisions. Last week's stronger-than-expected jobs report has raised doubts about potential rate cuts, leading to a sell-off in technology and growth stocks. This sentiment is further evidenced by rising Treasury yields, with the 10-year yield approaching the 5% mark.
11:25pm: Week ahead
US financial markets will focus on inflation data in the week ahead, with key reports including the Producer Price Index (PPI) on Tuesday and the Consumer Price Index (CPI) on Wednesday, which will provide fresh clues on inflation’s trajectory as the Federal Reserve weighs its next move.
Retail sales data on Thursday and housing market figures on Friday will offer insights into economic momentum for the fourth quarter.
9.43am: Wall Street suffers at open
Wall Street faced a tough start to the week as trading got underway on Monday following axed expectations for Federal Reserve rate cuts this year.
The Nasdaq shed 1.4% following the opening bell, while the S&P 500 dropped 0.9% and Dow Jones moved just below the mark.
Following Friday’s expectation-beating job figures, markets had stopped fully pricing in a further interest rate by the Fed this year come Monday.
“Markets are likely to navigate several potentially unexpected developments this week,” Tickmill Group partner Patrick Munnelly said.
“As the final week before President-elect Trump’s inauguration on January 20, there is a high chance he will quickly implement executive orders on various policy issues, potentially including tariffs. Meanwhile, this period marks a relative lull in activity from major central banks, which are set to resume decisions toward the end of the month.”
Monday’s early drop for stocks coincided with another slight uptick in US Treasury yields, while the dollar jumped 0.57% against the pound on reduced rate cut bets.
6.23am: Stocks to tumble
Wall Street appeared on course for another grim day on Monday as traders wiped off bets for Federal Reserve rate cuts this year in response to Friday’s strong job market data.
Futures had the Nasdaq off 1.2% ahead of the opening bell, while the S&P 500 and Dow Jones were seen 0.8% and 0.4% lower respectively.
Each had faced steep declines on Friday as stronger-than-expected non-farm payroll figures hampered hopes for rate cuts.
Some 256,000 jobs had been added across the US economy in December, against the 155,000 anticipated, while unemployment unexpectedly fell from 4.2% to 4.1%.
Given the implied strength within the US economy, traders were no longer fully pricing in a Fed rate cut this year in response come Monday.
Inflation figures for December on Wednesday will be in focus as a result, with markets expecting the headline rate to have inched up from 2.7% to 2.8% and core inflation to have remained at 3.3%.