The Nasdaq fell on Monday, while the S&P 500 bounced off a two-month low and gained slightly as US Treasury yields stayed elevated. This trend is attributed to investors dialing back expectations on the pace of rate cuts from the Federal Reserve.
Recent economic data suggest a resilient economy with nagging price pressures, which has pressured equities. Comments from Fed officials have pushed bond yields higher, further fueling concerns about inflation. The S&P 500 had weekly losses in four of the last five weeks.
Treasury yields edged higher, touching a 14-month high of 4.805%. Markets are pricing in about 27 basis points of cuts from the Fed this year, with a 52.9% chance for a June cut.
Industry experts warn that the inflation issue is pressing and that higher yields aren’t great for either the bond market or the stock market. The Dow Jones Industrial Average rose 358.67 points, while the S&P 500 gained 9.18 points, but the Nasdaq Composite lost 73.53 points.
Health insurers jumped after President Joe Biden’s administration proposed 2026 reimbursement rates for Medicare Advantage plans, resulting in a 2.2% increase in payments. Energy sectors climbed as crude prices rose on expectations of tougher US sanctions on Russian oil.
Chip stocks slipped, with Nvidia and Micron Tech down due to restrictions on artificial-intelligence chip and technology exports. Moderna plummeted 16.8% after slashing its 2025 sales forecast by $1 billion.
Source: https://www.reuters.com/markets/us/futures-slide-investors-bet-no-fed-rate-cuts-2025-yields-climb-2025-01-13