NEW YORK (AP) — Drops for Nvidia and other tech stocks are weighing on Wall Street Monday and keeping it in its weekslong rut.
The S&P 500 was down 0.6% in midday trading, coming off its fourth losing week in the last five. The weakness for Big Tech stocks dragged the Nasdaq composite to a loss of 1.3% as of 11:35 a.m. Eastern time, while the Dow Jones Industrial Average was an outlier and up 139 points, or 0.3%.
Stocks have been under pressure the last month as traders cull expectations for how much relief the Federal Reserve may deliver this year through lower interest rates.
Such cuts would give the economy a boost, and much of the U.S. stock market's run to records last year was on the assumption that more are coming after the Fed began lowering rates in September. But inflation has stubbornly remained above the Fed's 2% target, and recent reports have suggested a still-solid U.S. economy doesn't need much help from lower rates. Questions are growing whether the Fed will deliver even a single cut in 2025.
Higher rates put downward pressure on prices for all kinds of investments, and those seen as expensive can feel the stiffest punches. Nvidia fell 2.9% and was the heaviest weight on the S&P 500, though that represents just a smidgen of its huge gains made in recent years. The chip company's stock had nearly quintupled over the last three years amid the frenzy around artificial-intelligence technology.
It felt pressure as President Joe Biden proposes a new framework for the exporting of the advanced computer chips used to develop AI. That's despite warnings from the industry that a hastily implemented new rule could fragment global supply chains and hurt U.S. companies.
Apple's 2.3% drop and Microsoft's slip of 1.2% were also among the heaviest weights on the market. Because they're two of the largest companies on Wall Street, their moves pack more punch on the S&P 500 than other stocks. The index is on track for another loss even though more stocks within it are rising than falling.
Moderna tumbled 21.5% for the largest loss in the S&P 500 after giving a forecast for revenue this upcoming year that fell short of analysts' expectations. The vaccine maker, which is seeing a slowdown in COVID-related sales, is accelerating a cost-cutting program to cut expenses in research and development and other areas.
Macy’s fell 6.3% after saying it will likely report revenue for the last three months of 2024 that’s at or slightly below the low end of the $7.8 to $8 billion forecasted range it earlier gave.
On the winning side of Wall Street were oil-and-gas companies after the price of oil climbed. A barrel of benchmark U.S. crude rose 3% to $78.82 per barrel, while Brent crude climbed 1.8% to $81.23 per barrel. The Biden administration said Friday it's expanding sanctions against Russia's energy industry.
Exxon Mobil gained 2.2%, and Valero Energy jumped 6.4%.
In the bond market, which has been dictating much of Wall Street's action lately, Treasury yields were ticking higher still.
The yield on the 10-year Treasury rose to 4.79% from 4.76% late Friday. It’s been climbing relentlessly over the last month, and it was below 3.65% just in September.
The strong reports on the U.S. economy have helped push yields higher. So have worries that tariffs and other policies possibly coming from President-elect Donald Trump will boost inflation along with economic growth.
A report coming on Wednesday could offer the next spark for the bond market. That’s when the government will deliver the latest monthly update on inflation that U.S. consumers are feeling. Economists expect it to show inflation accelerated a touch to 2.8% in December from 2.7% in November.
“Rates remain the most important variable for equity market direction,” according to Michael Wilson and other strategists at Morgan Stanley.
Outside of the inflation data and its effect on interest rates, this upcoming week will also feature earnings reports from Bank of America, JPMorgan Chase and other big banks. They're helping to kick off the start of earnings reporting season.
If Treasury yields continue to rise, either stock prices need to fall or companies need to produce bigger profit growth to make up for it.
In stock markets abroad, indexes were mostly lower across Europe and Asia.
Stocks fell 1% in Hong Kong and 0.2% in Shanghai, even though China reported its exports grew at a faster pace in December than expected. Factories were rushing to fill orders to beat higher tariffs that Trump has threatened to impose once he takes office.
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AP Writers Matt Ott and Zimo Zhong contributed.