Nasdaq Index, Dow Jones, S&P 500 News: Rising Yields, Lower Tech Sector Pressure Benchmark

Key Points

• S&P 500 sees early-year decline
• Federal Reserve’s policy impacts markets
• Tech stocks face pressure, Tesla shines

S&P 500 Starts 2024 on a Downward Note Amid Rate Hikes

Stocks began the new year with a decline, following a robust rally in 2023. The S&P 500, after a strong 24% rally last year, faced a setback, influenced by a slight rebound in interest rates and profit-taking moves by investors.

Bond Markets and Federal Reserve’s Rate Policy

The bond markets experienced tumultuous times in 2023, grappling with interest rate hikes and recession fears. The Federal Reserve’s rate-hiking cycle is anticipated to end, with rate cuts expected in 2024. However, the high interest rates could continue to influence the economy, raising concerns about a possible recession.

Tech Stocks Under Pressure

Leading the market pullback, Apple shares fell after Barclays downgraded the stock, citing concerns over iPhone sales. This trend was echoed in other tech giants like Microsoft and Nvidia.

Tesla’s Strong Quarter and Other Market Movers

Tesla topped fourth-quarter delivery estimates, marking a significant achievement in a challenging macro environment for electric vehicles. On the other hand, stocks like Estee Lauder and GoodRx faced declines following downgrades. Baidu’s halted acquisition of Joyy’s live-streaming business also impacted the market.

Manufacturing Sector Contracts

Additionally, the U.S. manufacturing sector witnessed a contraction in December, with the Manufacturing PMI falling to 47.9, signaling potential challenges ahead.

Wall Street’s Cautious Outlook for 2024

Despite a stellar performance in 2023, Wall Street strategists predict subdued returns for stocks this year. The CNBC Pro Market Strategist Survey suggests the S&P 500 might see only modest growth in 2024. Concerns over a weaker economy and slower consumer spending could impact corporate earnings growth.

Technical Analysis

The E-mini S&P 500 Index, currently at 4776.50, maintains a bullish stance, positioned above the 200-day and 50-day moving averages of 4473.82 and 4572.87 respectively. Despite this bullish indication, the substantial gap between its current price and the nearest minor support level at 4562.50 leaves the market exposed to potential vulnerabilities. This distance suggests a heightened risk of a swift downward movement if market conditions shift. In the absence of immediate resistance levels, while there is potential for further upside, the market’s stability could be tested by unforeseen factors or market shifts.