Stocks Lose Initial Gains as Large Tech Shares Decline

January 2, 2026

Market Update

The S&P 500 Index saw a slight dip today, while the Dow Jones Industrial Average managed a small gain. The Dow rose by 0.23%, but the Nasdaq 100 Index experienced a decline of 0.28%. Meanwhile, March E-mini S&P futures fell by 0.04%, and March E-mini NASDAQ futures decreased by 0.28%.

Early gains in stock indexes evaporated, mainly due to pressure from large technology firms. Rising bond yields have negatively impacted stocks, as the yield on the 10-year Treasury note climbed to 4.19%, the highest it’s been in about a week and a half. Additionally, a downturn in insurance stocks is affecting the overall market sentiment.

On a brighter note, the strength of semiconductor manufacturers, major tech companies, and firms specializing in AI infrastructure is helping to support stock prices. European stock markets are also showing strength today, with the Euro Stoxx 50 reaching all-time highs.

The S&P manufacturing PMI for December remained unchanged at 51.8, which aligns with expectations. As for the upcoming FOMC meeting on January 27-28, the market is pricing in only a 15% chance of a 25 basis point rate cut.

In international markets, stock indexes are generally rising. The Euro Stoxx 50 saw an increase of 0.77%. Notably, the Chinese and Japanese markets are closed today for New Year’s Day.

Interest Rates

The March 10-year T-note decreased by 4 ticks, with its yield rising slightly to 4.181%. It’s been a challenging day for T-notes, hitting a 1.5-week low as strong stock market performance dampens demand for these safe-haven investments. Rising inflation expectations are also a concern, as evidenced by the 10-year breakeven inflation rate climbing to 2.262%, a peak not seen in about two and a half weeks.

European government bond yields have increased today, with the 10-year German bond yield reaching 2.910%, its highest level in a week and a half. The UK’s 10-year bonds also rose, reaching a similar high of 4.530%.

The S&P Manufacturing PMI for the eurozone dropped from the previously reported 49.2 to 48.4. Moreover, M3 money supply in the eurozone rose by 3.0% year-on-year in November, surpassing forecasts.

The UK’s December S&P Manufacturing PMI was revised down to 50.6 from an earlier estimate of 51.2. As for the European Central Bank, the swap market assigns a mere 1% chance of a rate hike of 25 basis points at their next meeting on February 5.

US Securities

Shares of the “Magnificent Seven” fell after seeing early gains, dragging the overall market down. Microsoft, Amazon, and Meta Platforms all dropped more than 2%. Tesla’s stock fell more than 1% after it reported fourth-quarter vehicle deliveries that were below expectations. Alphabet and Apple also saw minor declines.

In contrast, semiconductor and AI infrastructure stocks rallied today. SanDisk rose over 12%, while ASML Holding gained more than 8% after a significant upgrade. Other notable gainers in the semiconductor sector included Micron Technology and Lam Research.

Cryptocurrency-related stocks are showing gains as well, with Bitcoin rising over 1%. Companies like Riot Platforms and Mara Holdings are up significantly, reflecting the renewed interest in the crypto market.

Insurance stocks, however, are facing headwinds today. Progressive was notably down by more than 7%, alongside other insurers experiencing losses.

Sable Offshore shares surged over 17% after a federal court allowed the company to restart its California oil pipeline. RH and Wayfair also had positive performances thanks in part to a tariff postponement on furniture.

Vertiv Holdings gained over 8% following an upgrade from Barclays with a new price target.