Market Recap: Wall Street Wavers Amid Economic Data and Tariff Concerns
Major Indexes Close Mixed as Investors Digest Economic Reports
On Wednesday, January 8, 2025, U.S. stock markets experienced a choppy session, with major indexes closing mixed as investors grappled with conflicting economic data and reports of potential new tariffs. The S&P 500 inched down 0.17% to 5,899.19, while the Dow Jones Industrial Average slipped 0.17% to 42,455.28. The Nasdaq Composite fell 0.26% to 19,439.31, and the Russell 2000 index, which tracks smaller companies, declined 0.65% to 2,235.28.
Economic Data Fuels Inflation Concerns
Market sentiment was influenced by recent economic reports that painted a picture of a resilient U.S. economy. The Labor Department reported a decrease in jobless claims for the previous week, while a separate ADP National Employment Report showed private payrolls growth slowing sharply in December. These conflicting signals have left investors uncertain about the Federal Reserve’s next moves regarding interest rates.
Fed Governor Christopher Waller stated that inflation should continue falling in 2025, potentially allowing for further interest rate reductions. However, the pace of these cuts remains uncertain. The CME FedWatch tool currently indicates no meaningful probability of a 25 basis point rate cut before June 2025.
Treasury Yields Rise, Pressuring Equities
The yield on the 10-Year U.S. Treasury Note climbed seven basis points to close at 4.693%, touching its highest level since April 29, 2024. This rise in yields has put pressure on equities, as higher risk-free rates can make stocks less attractive to investors.
Sector Performance and Notable Stocks
The technology sector faced headwinds, with the Technology Select Sector SPDR (XLK) declining 2%. Notable tech stocks saw mixed performance:
– NVIDIA Corporation (NVDA): Down 6.2%, leading the declines among Dow components
– Advanced Micro Devices, Inc. (AMD): Fell 4.48%
– Microsoft Corporation (MSFT): Bucked the trend, rising 0.6%
Other sectors and stocks of interest included:
– Energy Select Sector SPDR (XLE): Increased 1%, benefiting from rising crude oil prices
– eBay Inc. (EBAY): Surged 11.1% after Meta Platforms announced plans to show eBay listings on Facebook Marketplace
– Edison International (EIX): Dropped 7.8% after its California subsidiary cut power to customers due to wildfire risks
Quantum Computing Stocks Tumble
Quantum computing stocks experienced significant declines following comments from Nvidia CEO Jensen Huang suggesting that practical quantum computers may be decades away:
– Rigetti Computing (RGTI): Plummeted 48%
– IonQ (IONQ): Fell 44%
– Quantum Computing (QUBT): Lost 48.5%
Upcoming Market Events
Investors are now turning their attention to several key events that could impact market direction:
1. December Fed Meeting Minutes: To be released later today, providing insights into the central bank’s thinking on monetary policy
2. Non-Farm Payrolls Report: Expected on Friday, January 10, with economists projecting an increase of 160,000 jobs in December
3. December Inflation Report: Scheduled for release on January 15, which will be crucial for assessing inflationary pressures
Global Market Influences
International factors are also weighing on U.S. markets. Reports suggest that President-elect Donald Trump is considering invoking the International Economic Emergency Powers Act to implement new tariffs. This has raised concerns about potential global trade tensions and their impact on economic growth.
Asian markets showed weakness, with the MSCI’s broadest index of Asia-Pacific shares outside Japan falling 0.2% and Japan’s Nikkei down 0.8%. The U.S. dollar remained strong against major currencies, particularly the Japanese yen, which hovered near six-month lows.
As markets navigate through these complex economic signals and geopolitical developments, investors remain cautious. The focus in the coming days will be on deciphering the Federal Reserve’s rate cut trajectory and assessing the strength of the U.S. economy through upcoming economic reports.
