Stock Market Today: Major Indexes Tumble Amid Tech Sell-Off and Economic Data Concerns
Market Overview: January 8, 2025
On Wednesday, January 8, 2025, the U.S. stock market experienced a significant downturn, with major indexes closing in negative territory. The sell-off was primarily driven by a sharp decline in technology stocks and renewed concerns about inflation and potential delays in interest rate cuts.
Key Market Indexes Performance
– S&P 500: The broad market index fell 1.11% to close at 5,909.03 points.
– Nasdaq Composite: The tech-heavy index plummeted 1.89% to finish at 19,489.68 points.
– Dow Jones Industrial Average: The blue-chip index shed 0.42% to end at 42,528.36 points.
Factors Influencing Market Movement
1. Strong Economic Data: The Institute of Supply Management (ISM) reported that the services PMI for December came in at 54.1, beating expectations and indicating expansion in the services sector.
2. Inflation Concerns: The ISM price index climbed to 64.4 in December, up from 58.2 in November, raising worries about persistent inflation.
3. Interest Rate Expectations: The strong economic data has led to speculation that the Federal Reserve may delay further interest rate cuts, with the CME FedWatch tool showing no significant probability of a rate cut before June 2025.
4. Treasury Yields: The yield on the 10-Year U.S. Treasury Note rose to 4.693%, its highest level since April 2024, putting pressure on equity valuations.
Major Stock Movements and Corporate News
– NVIDIA Corporation (NVDA): The AI chip leader saw its stock price plummet 6.22%, leading the tech sector’s decline.
– Tesla, Inc. (TSLA): Shares fell 4% following a downgrade by BofA Global Research to ‘neutral’ from ‘buy’.
– Micron Technology, Inc. (MU): The stock rose 2.67% after NVIDIA’s CEO mentioned Micron as a supplier for their new gaming chips.
– Citigroup Inc. (C): Shares climbed 1.29% on bullish coverage from Truist Securities.
– Bank of America Corporation (BAC): The stock gained 1.5% following positive ratings from multiple brokerages.
Sector Performance
– The Technology Select Sector SPDR (XLK) decreased by 2%.
– The Consumer Discretionary Select Sector SPDR (XLY) fell 1.9%.
– The Communication Services Select Sector SPDR (XLC) declined 1.1%.
– The Energy Select Sector SPDR (XLE) was one of the few gainers, increasing by 1%.
Market Breadth and Volatility
– Decliners outnumbered advancers on both the NYSE and Nasdaq by a 2.14-to-1 ratio.
– The CBOE Volatility Index (VIX), often referred to as the “fear gauge,” rose 11.1% to 17.82.
– Trading volume was elevated, with 20.45 billion shares traded, significantly higher than the 20-session average of 12.52 billion.
Looking Ahead: Key Events to Watch
Investors are now turning their attention to upcoming economic indicators and corporate earnings:
1. ADP private payrolls report and jobless claims data, due on January 9, 2025.
2. Minutes from the Federal Reserve’s December meeting, to be released later today.
3. Non-farm payrolls data, expected later this week.
4. Quarterly earnings reports from major banks, scheduled for next week.
Conclusion
As the market grapples with strong economic data and inflation concerns, investors are reassessing their expectations for interest rate cuts in 2025. The tech sector’s vulnerability to higher yields continues to be a significant factor in market performance. With important economic data and the Fed minutes on the horizon, market participants will be closely monitoring these releases for further insights into the economic landscape and potential monetary policy directions.
