Stock market strength wanes ahead of the weekend on Wall Street.
Investors on Wall Street decided to pocket some gains at the end of the week, causing a dip in the market. Tech stocks felt the brunt of this profit-taking, dropping significantly. Despite the downturn, the indices managed to somewhat recover from their daily lows. The increase in bond market yields also had a negative impact on the market, with traders citing low trading volumes due to many market participants still on holiday break. The economic news was scarce, with no major data or events scheduled. The Dow Jones Index decreased by 0.8% to 42,992 points, while the S&P 500 and Nasdaq Composite dropped by 1.1% and 1.5%, respectively. At the NYSE, there were more decliners (2,399) than advancers (409), with 46 issues remaining unchanged.
The increase in bond yields acted as a drag on the market. The yield on 10-year notes climbed to a multi-month high of over 4.60%. Market analysts anticipate the US Federal Reserve to slow down its rate hikes next year. The initial jobless claims data published on Thursday further fueled this expectation, suggesting a robust labor market.
The dollar weakened despite the rise in bond yields, with the Dollar Index dipping by 0.1%. The euro showed a slight improvement due to rising bond yields in the Eurozone, but it was hindered by France's growing budget deficit, which the new government is unlikely to address, according to Swissquote.
Oil prices improved, with Brent and WTI recording gains of up to 0.8%. This was due to the fifth consecutive weekly drop in US crude inventories and expectations of additional economic stimulus from the Chinese government, which could boost Chinese oil demand.
The gold price fell, with the gold futures contract losing 0.7% to $2,616. Pessimism about the possibility of substantial US rate cuts in the new year and comments from the US Federal Reserve and President-elect Donald Trump's inflationary plans have put pressure on the gold price. Historically, higher interest rates tend to diminish the appeal of non-yielding gold.
Tech stocks were severely affected. The shares of companies like Nvidia, Apple, Amazon, and Microsoft in the Dow Jones Index dropped between 1.3% and 2.0%. Tesla's stock continued its decline, dropping for the second day in a row and losing another 4.9%. Since November 6, when it started a rally after the US presidential election, the stock has increased by approximately 81%.
Biontech's ADRs (American Depositary Receipts) rose by 0.2%, following settlements of patent disputes in the US with two payments totaling around $1.26 billion to the US health authority NIH and the University of Pennsylvania. Among small-caps, Grid Dynamics surged by 7.7%, set to join the S&P SmallCap 600 index on January 2, replacing Revelyst, which remained unchanged.
Viracta Therapeutics plummeted 32.5%, halting a clinical trial for a treatment for certain lymphomas due to financial reasons. Viracta is now exploring "strategic options," which may include selling the company.
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Wall Street investors, susceptible to the rise in bond yields, also participated in the profit-taking, further impacting Tech stocks on Wall Street. The yields on 10-year notes reached a multi-month high on Wall Street, causing a ripple effect in the market.
