Dow, S&P 500, Nasdaq sink amid cratered hopes for 2025 rate cuts

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Tech led a slide in US stocks on Monday, while the dollar and bond yields climbed amid fading hopes for interest-rate cuts ahead of this week’s key consumer inflation report.

The S&P 500 (^GSPC) sank 0.8%, while the Nasdaq Composite (^IXIC) tumbled about 1.3%. The Dow Jones Industrial Average (^DJI), which includes fewer tech stocks, fell nearly 0.1%.

Stocks are shaping up for another rough session after Friday’s plunge, which wiped out all year-to-date gains for Wall Street’s major gauges. A hot December jobs report has rattled markets, spurring concern that signs of strength in the economy will encourage the Federal Reserve to keep rates higher for longer.

DJI – Free Realtime Quote USD

As of 9:40:20 AM EST. Market Open.

^DJI ^IXIC ^GSPC

The 10-year Treasury yield (^TNX) added to recent gains to touch a 14-month high, trading close to 4.8%, and the 30-year yield (^TYX) neared 5% as US bonds sold off. Meanwhile, the dollar (DX-Y.NYB) surged to a two-year high against major currency peers, with the UK pound (GBPUSD=X) in particular coming under pressure.

As of Monday, traders are betting there will be no rate cut until at least September, per the CME FedWatch tool, and that the Fed will lower borrowing costs by just 30 basis points in the whole of 2025.

That has intensified the spotlight on the Consumer Price Index reading for December, due on Wednesday, given one big concern for markets is that inflation won’t cool to the central bank’s 2% target.

Adding to the gloom, oil prices rose to their highest levels in five months before paring gains after the US imposed tougher sanctions on Russia’s crude industry, risking supply to China and India. Brent (BZ=F) briefly climbed more than 2% to trade above $81 a barrel, while West Texas Intermediate (CL=F) changed hands near $78.

On the corporate front, shares of Nvidia (NVDA) and Tesla (TSLA) slid as all the “Magnificent Seven” tech megacaps lost ground in the market turmoil. Europe’s largest pension fund revealed that it sold its entire stake in Tesla over CEO Elon Musk’s pay package.

LIVE 3 updates

  • Stocks slide as hopes of rate cuts fade

    Stocks opened lower on Monday with tech leading the losses as optimism over rate cuts this year continued to fade and bond yields rose.

    The S&P 500 (^IXIC) sank 0.8%, while the Nasdaq Composite (^IXIC) dropped 1.3%. The Dow Jones Industrial Average (^DJI) fell about 0.1%.

    Stock continued their sell-off from Friday’s plunge, which wiped out all year-to-date gains for the major averages.

    A hot December jobs report spooked the markets as investors faded the probability of two rate cuts this year.

    Among Monday’s laggards, shares of Nvidia (NVDA) and Tesla (TSLA) slid more than respectively, as the “Magnificent Seven” group lost ground in the market sell-off.

  • Jenny McCall

    Good morning. Here’s what’s happening today.

  • Brian Sozzi

    Another risk-off morning

    Investors awake to markets continuing their post-red-hot jobs report tantrum.

    CME – Delayed Quote USD

    As of 9:30:20 AM EST. Market Open.

    In focus remains the rise in yields and now, the rise in energy prices. Both of these things happening at the same time is the worst possible scenario for the bulls. At the time of this writing, pre-market weakness is being seen in top momentum names such as Tesla (TSLA) and Nvidia (NVDA).

    Important point this morning by the Goldman Sachs team:

    “The move in rates is also now tightening financial conditions such that it may weigh on growth and risk assets. Positions that benefit from lower US yields now look more attractive, especially for portfolios that already embrace the US growth theme.”


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