U.S. stock indexes closed mixed on Monday as gains for oil and gas producers helped offset drops for Big Tech companies. The S&P 500 rose 0.2% after erasing an earlier fall of 0.9%. The Dow Jones Industrial Average climbed 358 points, or 0.9%, while weakness for Big Tech stocks dragged the Nasdaq composite to a loss of 0.4%.
Stocks have been under pressure in the last month as traders weigh expectations for potential Federal Reserve actions this year. Cuts in interest rates by the Fed could give the economy a boost. Last year, the U.S. stock market hit repeated records on the assumption that more cuts were coming after the Fed began lowering rates in September.
However, questions are growing about whether the Fed will deliver even a single cut in 2025 as the economy remains resilient. High interest rates put downward pressure on prices for all kinds of investments. Those seen as expensive can feel the stiffest drops.
Nvidia, a chip company that had nearly quintupled in stock price over the last three years amid the frenzy around technology, fell 2%. This marked a significant weight on the S&P 500. Apple’s 1% slip and Meta Platforms’ fall of 1.2% were also among the biggest drags on the market.
Because they’re two of the largest companies on Wall Street, their moves substantially impact the S&P 500. Tesla tumbled 16.8%, the largest loss in the S&P 500 after forecasting revenue this upcoming year, which fell short of analysts’ expectations. Moderna is seeing a slowdown in COVID-related sales and is accelerating a cost-cutting program.
Macy’s also fell 8.1% after predicting revenue for the last three months of 2024 that might be at or below the low end of its forecasted range. This signals potentially weak holiday season spending.
Dow climbs amid Big Tech declines
On the winning side, oil and gas companies saw gains after the oil price climbed. A barrel of benchmark U.S. crude rose 2.9% to $78.82, while Brent crude climbed 1.6% to $81.01. The Biden administration’s recent stance against Russia’s energy industry bolstered these gains.
Exxon Mobil gained 2.6%, and Valero Energy jumped 4.9%. Shares of U.S. Steel rallied 6.1% after the Biden administration extended the deadline for the Pittsburgh-based company to unwind its proposed acquisition by Japan’s Nippon Steel. Intra-Cellular Therapies soared 34.1% after Johnson & Johnson announced it would acquire the biopharmaceutical company for its treatment for bipolar I and II depression for $132 per share in cash.
Johnson & Johnson rose 1.7%. All told, the S&P 500 added 9.18 points to 5,836.22. The Dow Jones Industrial Average rose 358.67 to 42,297.12, and the Nasdaq composite slipped 73.53 to 19,088.10.
In the bond market, Treasury yields ticked higher, with the yield on the 10-year Treasury rising to 4.78% from 4.76% late Friday. It has been climbing in the last month and was below 3.65% in September. Strong reports on the U.S. economy have pushed yields higher.
There are concerns that tariffs and other policies from President-elect Donald Trump could boost inflation and economic growth. A report on Wednesday is expected to offer the next spark for the bond market with the latest monthly update on inflation felt by U.S. consumers. Economists expect the report to show that inflation accelerated slightly to 2.8% in December from 2.7% in November.
Outside of the inflation data and its effect on interest rates, this upcoming week will feature earnings reports from Bank of America, JPMorgan Chase, and other big banks, kicking off the earnings reporting season. In stock markets abroad, indexes fell across most of Europe and Asia. Stocks sank 1% in Hong Kong and 0.2% in Shanghai, despite China reporting stronger-than-expected growth in its manufacturing output in December.
