Traders work on the floor of the New York Stock Exchange (NYSE) on January 31, 2024 in New York City, USA.
Brendan McDiarmid | Reuters
Stocks fell on Monday as U.S. Treasury yields soared on concerns that the Federal Reserve wouldn't cut interest rates as much as expected. McDonald's lackluster performance also dampened investor sentiment.
of Dow Jones Industrial Average It fell 370 points, or nearly 1%.of S&P500 While the decline was 0.5%, Nasdaq Composite It fell by nearly 0.6%. The S&P 500 hit an all-time high last week on the back of a sharp rally in Big Tech stocks.
S&P 500 performance in 2024
The 10-year Treasury yield recently rose more than 13 basis points to 4.168%, as investors evaluated strong new economic indicators that suggest interest rates may remain high for longer than expected. The benchmark yield last week traded around 3.81%.
“It's a realignment of expectations about how quickly the Fed will change course,” said Keith Lerner, co-chief investment officer at Trust. “Pivot trades are being unwound to some extent. The tension between a strong economy and what that means for the Fed will continue to create these types of reset dates.”
Fed Chairman Jerome Powell on Sunday also reiterated his comments after last week's January policy meeting, suggesting a March rate cut is unlikely. Since that statement, expectations for a rate cut have receded, and according to CME Group's FedWatch tool, the probability of a rate cut in March is 14.5%.
Earnings season drags on; mcdonalds It fell 4% after a crowded quarter. The results raised concerns about the earnings of companies other than the tech giants and whether they would be able to make it through the rest of the earnings season.
Elsewhere, Boeing fell more than 1% on further 737 Max woes. Tesla also led the broader market, falling more than 5% on lingering concerns about increased competition and persistent pricing pressure on EV giants.