Wall Street's major stock indexes opened sharply lower on Monday, their lowest in more than a week. That's as sparse trading volume and concerns about rising U.S. Treasury yields cloud the traditionally strong year-end stock rally.
The Dow Jones Industrial Average fell more than 650 points, or 1.52%, to $42,340.69 shortly after the opening bell, while the S&P 500 index fell 89.52 points, or 1.51%, to $5,881.32, and the Nasdaq Composite Index fell 326.47 points. (1.66%) decrease to 19,397.26.
All 11 sectors of the S&P 500 fell, with the consumer sector leading the decline.
Dow halved its decline by afternoon
Growth stocks such as Tesla and Meta fell 3.1% and 2.2%, respectively. Semiconductor company Broadcom fell 3.8%, pushing the semiconductor index down more than 2%.
This slump was unusual, as stock prices tend to trend strongly from the last five business days of December to the first two days of January, a phenomenon known as the Santa Claus Rally. The S&P 500 index has risen an average of 1.3% since 1969, according to the Stock Traders Almanac.
Benchmark indexes posted modest gains last week, with analysts pointing to a strong start to the year that sent valuations soaring. The index has been trading in a bull market for more than two years and is on track to end with a gain of more than 20% for the second year in a row.
But some analysts expect President-elect Donald Trump's policies to lead to inflation, with the benchmark 10-year Treasury yield hovering near its highest level since May 2024. It decreased to 4.548%.
“If yields continue to stay at these levels…this will be a strong headwind for stock prices. “It's trading at or near all-time highs,” said David Morrison, senior market analyst at Trade Nation.
Rising U.S. Treasury yields since early December have weighed on the S&P 500 .SPX and Dow .DJI, putting the indexes on track for their roughest month since April.
Markets have toned down expectations for a rate cut in 2025 after the Fed took a cautious stance at its recent meeting. The market currently expects the first rate cut next May, according to CME Group's FedWatch tool.
Later in the week, investors will scrutinize the December ISM Manufacturing Activity Survey and weekly report on unemployment claims ahead of next week's key jobs report.
Boeing stock fell 3.5%, the worst performer in the S&P 500 index. South Korea has ordered an emergency safety inspection of the airline's entire operational system. The country's worst aviation accident A Boeing plane was involved over the weekend.
Cryptocurrency stocks such as MicroStrategy fell 5.3%, Coinbase fell 4.9% and MARA Holdings fell 5%, following a 2.4% drop in Bitcoin prices.
Trading is expected to be affected by thin trading ahead of the New Year holidays on Wednesday, and is likely to remain weak until January 6th.
Declining issues outnumbered advancing issues on the New York Stock Exchange by a ratio of 4.12 to 1 and on the Nasdaq by a ratio of 3.94 to 1.
The S&P 500 had no new 52-week highs and 11 new lows, while the Nasdaq Composite Index had 24 new highs and 66 new lows.
