Stock Market Today: Indexes Tumble as Rate Cut Hopes Fade
The stock market is off to a rocky start on Monday, January 13, 2025, as investors grapple with diminishing hopes for interest rate cuts and brace for a crucial week of economic data and corporate earnings releases. Major market indexes are down, with tech stocks leading the decline, as traders reassess their expectations for Federal Reserve policy in light of recent economic indicators.
Market Performance: Indexes in the Red
As of the latest check, futures for major U.S. stock indexes are pointing to a lower open:
– S&P 500 futures are down 0.8%
– Nasdaq 100 futures have slipped 1.2%
– Dow Jones Industrial Average futures are off by 0.4%
This downward trend follows a challenging previous week, where all three major indexes wiped out their year-to-date gains. The robust December jobs report released last Friday has cast doubt on the likelihood of imminent interest rate cuts, sending stocks tumbling and bond yields soaring.
Why is the Market Down Today?
Several factors are contributing to today’s market downturn:
1. Surging Bond Yields: The 10-year Treasury yield has touched a 14-month high, approaching 4.8%. Higher yields make bonds more attractive compared to stocks and raise borrowing costs for businesses and consumers.
2. Fading Rate Cut Expectations: Traders have scaled back their projections for Federal Reserve rate cuts to just 27 basis points for all of 2025, with the terminal rate now seen around 4.0% compared to the 3.0% many had hoped for earlier.
3. Oil Price Spike: Crude oil prices have jumped to four-month highs, with Brent crude reaching $81.19 a barrel and U.S. crude at $78.07 per barrel. This surge is due to signs of weaker crude shipments from Russia as Washington steps up sanctions.
4. Tech Sector Weakness: Popular tech stocks, including Nvidia (NVDA) and Tesla (TSLA), are experiencing significant premarket declines, contributing to the overall market weakness.
Upcoming Market Events to Watch
Investors should keep an eye on several key events this week that could impact market direction:
1. Inflation Data: The December Consumer Price Index (CPI) report, due on Wednesday, will be crucial in shaping expectations for Fed policy. Any core inflation reading above the forecast 0.2% could further diminish hopes for rate cuts.
2. Corporate Earnings: The fourth-quarter earnings season kicks off with major banks reporting on Wednesday, including Citigroup (C), Goldman Sachs (GS), JPMorgan Chase (JPM), Wells Fargo (WFC), and Bank of America (BAC).
3. Fed Speakers: At least five Federal Reserve officials are scheduled to speak this week, offering insights into the central bank’s thinking on monetary policy. New York Fed President John Williams’ comments on Wednesday will be closely watched.
4. Economic Indicators: In addition to the CPI, markets will digest the Producer Price Index (PPI), U.S. retail sales data, and housing starts figures throughout the week.
Stocks to Watch
While the broader market is under pressure, investors should keep an eye on these notable stocks:
– Taiwan Semiconductor Manufacturing Company (TSM): Set to report earnings this week, providing insights into the global chip industry.
– UnitedHealth Group (UNH): The healthcare giant’s earnings report could offer a glimpse into the state of the U.S. healthcare sector.
– Nvidia (NVDA) and Tesla (TSLA): These tech leaders are experiencing significant premarket declines and could influence broader market sentiment.
As the market navigates this challenging landscape, investors should stay informed about these key developments and their potential impact on various sectors. With inflation concerns, earnings reports, and Fed policy in focus, the stock market today and throughout the week is likely to experience heightened volatility.
