The broad market index shed 0.57% to settle at 4,742.83, the Nasdaq Composite retreated 1.63% to 14,765.94, and the Dow Jones Industrial Average gained 25.50 points, or 0.07%, to end at 37,715.04
The S&P 500 dropped Tuesday, the first trading day of the year, as bond yields edged up and investors took some money off the table following a surprisingly strong 2023.
The broad market index shed 0.57% to settle at 4,742.83. The Nasdaq Composite retreated 1.63% to 14,765.94, for its worst day since October. The Dow Jones Industrial Average gained 25.50 points, or 0.07%, to end at 37,715.04. Markets were shut Monday for New Year’s Day.
Apple shares slipped more than 3% after Barclays downgraded the member of the Magnificent Seven market leaders basket to an underweight rating. On the other hand, the Dow remained in positive territory as defensive stocks such as Johnson & Johnson and Merck strengthened.
The blue-chip Dow logged a 13.7% gain and set a new record during 2023. Part of that rally was helped by a turn in interest rates. The 10-year Treasury yield had spooked investors by jumping more than 5% at one point in October, before it topped out and ended the year below 3.9%. On Tuesday, the 10-year yield rose nearly 8 bps, approaching 4% again.
That trend was reversing on Tuesday as the new year of trading began with megacap tech names dropping. Apple shares dropped after the negative call from Barclays. The company said Apple could lose around 17% this year because of lacklustre iPhone sales. Microsoft and Nvidia shares were also in the red.
This reversal is fairly common in the first day of trading, as per Infrastructure Capital Management CEO Jay Hatfield.
Despite this slight pullback, he expects stocks to pick back up once earnings season rolls back around.