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Nasdaq Flags First Over 1% Gain in 2024, Yields Dictate Market Behavior
Monday's trading session saw the Nasdaq index pocket a substantial gain over 1% for the first time in 2024. Depreciating yields acted as a catalyst, promoting the stocks of tech heavyweight companies. However, the Dow Industrials index remained quite stagnant following a significant drop in Boeing (NYSE:BA) shares.
Notable technological giants, Amazon.com (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL) enjoyed an approximate 2% boost. As investors anxiously awaited new inflation data and a swell of government debt, Treasury yields declined. The session ended with the key 10-year U.S. Treasury yield marking a low of 3.966%.
Stocks of Apple Inc. Surge Following New Product Launch
In tandem, Apple Inc. (NASDAQ:AAPL) saw a similar increase of about 2%. The announcement of its latest mixed-reality device, the Vision Pro, now available for sale in the United States from the 2nd of February, drove this uptick.
Semiconductor Index Recovers Following a Previous Dip
Meanwhile, leading chip makers Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) saw their stocks rise over 5%. The Philadelphia SE Semiconductor Index surged more than 3% after suffering an earlier 5.8% dip last week, the worst in percentage terms since October 2022.
Market Dynamics: Yields Driving Decisions
Bill Merz, leading capital markets research at U.S Bank Wealth Management, stated that recent market trends appear to be heavily influenced by yields. Investor sentiment is increasingly focusing on the anticipated timing and severity of future rate cuts. Amidst these oscillations, however, investors are showing optimism. A common belief is that decreasing yield rates are a justified reaction to current conditions while commending the Federal Reserve for maintaining a balance thus far.
Market Snapshot: Indexes and Sectors
The Dow Jones Industrial Average demonstrated a slight growth of 73.37 points or 0.20% to hit 37,539.48. The S&P 500 and the Nasdaq Composite advanced by 44.63 points or 0.95% to 4,741.87 and by 258.04 points or 1.78% to 14,782.11 respectively.
On the other hand, Boeing observed a steep 6.8% drop. This came soon after approving airlines to inspect jets that were grounded after an accidental detachment of a panel from an Alaska Airlines-operated 737 MAX 9 mid-flight, resulting in an emergency landing. Oil prices fell by 4%, fueling significant reductions in the S&P energy sector.
Following ambiguous economic data, predictions for drastic rate cuts by the Federal Reserve this year were curtailed, leading to an end to the S&P 500 index's nine consecutive weeks of gains last Friday.
Market Projections and Expectations
According to Raphael Bostic, Atlanta Fed President, the central bank's two objectives of reducing inflation while maintaining low unemployment have not yet clashed. Money market's forecasts indicate a minimum 25 basis-point rate cut by March, a fall from the initially expected 88.5%, derived from CME's FedWatch Tool's information.
On the NYSE and the Nasdaq, the number of advancing issues surpassed declining ones by ratios of 2.3:1 and 2:1 respectively, reflecting a positive market sentiment. The S&P 500 announced eight new 52-week highs without recording any new lows, while the Nasdaq recorded 85 new highs and 80 new lows.
