US benchmark stock indexes displayed a mixed performance as the so-called Magnificent 7 stocks experienced a decline after midday on Monday, which subsequently added pressure on the S&P 500 and the Nasdaq Composite. The technology-focused Nasdaq witnessed a decrease of 0.8%, closing at 19,016.9, while the S&P 500 fell by 0.1% to settle at 5,819.5.
Nevertheless, both indexes managed to recover slightly from their lowest points during the session. Conversely, the Dow Jones Industrial Average rose by 0.6%, concluding at 42,194.5, contributing to the gains made earlier in the trading session. The steepest decliners were predominantly in the technology and utilities sectors, whereas energy and materials sectors emerged as leading gainers during intraday trading. In terms of US Treasury yields, trading was largely mixed.
The 10-year Treasury yield remained relatively unchanged at 4.78% after reaching a new 52-week high earlier in the day. The yield had risen in the previous week following a robust nonfarm payroll report released on Friday that surpassed market expectations. This development has increased the likelihood that the Federal Reserve will maintain a pause on interest rate adjustments for the remainder of the year, according to the FedWatch Tool data. Among the mega-cap stocks, which are companies with a market capitalization exceeding $200 billion, Nvidia, Apple, Meta Platforms, Tesla, and Alphabet were noted as the steepest decliners during the trading session.
Additionally, Microsoft and Amazon.com, the other two members of the Magnificent 7, were featured among the 20 worst performers intraday. As the year nears its end, these seven companies are reported to constitute approximately 31% of the S&P 500. The decline of the Magnificent 7 comes ahead of the impending release of the producer price index on Tuesday and the consumer price index on Wednesday.
This situation has sparked concerns that a higher-than-expected inflation figure might lead to even elevated Treasury yields. A recent survey from the University of Michigan indicated that consumer expectations for five-year inflation have risen to 3.3% from 3% just a month prior. Market analysts predict that the forthcoming inflation data could bolster the stance that the Federal Open Market Committee is likely to maintain its current position for "some time," assuming the December CPI consensus projections materialize as anticipated, as highlighted in a note from Scotiabank late last week. BlackRock stated in a note on Monday, "We foresee US equity gains moderating from their peaks earlier this year but remaining robust, while US Treasury yields experience a climb.
Our current position remains overweight on US stocks and underweight on long-term Treasuries; however, we are vigilant for events that might lead us to adjust our outlook." Goldman Sachs has revised its projections for interest rate cuts this year, now forecasting two cuts in June and December, a reduction from the previous expectation of three.
A note from the firm indicated that a single rate reduction is projected for the following year in June, bringing the terminal rate down to a range between 3.5% and 3.75%. The note cautioned that accurately predicting the timing of these cuts remains challenging due to uncertainties regarding the FOMC's management of likely tariff increases. In the commodities market, West Texas Intermediate crude oil futures surged by 3.3%, reaching $79.03 per barrel—the highest intraday level since mid-August—following the announcement of new US sanctions on Russia.
These sanctions target prominent producers Gazprom Neft and Surgutneftegas, along with over 180 vessels involved in transporting Russian oil, as reported by Reuters. The sanctions are anticipated to considerably impact oil exports, prompting China and India to potentially increase their crude sourcing from the Middle East, Africa, and the Americas, thereby inflating prices and shipping expenses, as discussed by traders and analysts. In corporate developments, Johnson & Johnson has agreed to acquire Intra-Cellular Therapies for approximately $14.6 billion in cash, a move aimed at bolstering its neuroscience portfolio.
Following the announcement, Intra-Cellular experienced a significant boost of over 34%, while Johnson & Johnson saw a rise of 1.4%. Conversely, Moderna's shares plummeted by 19%, marking it as the worst performer on the S&P 500, after the company adjusted its revenue expectations for 2025 downwards—projecting revenue between $1.5 billion and $2.5 billion, a decrease from the prior range of $2.5 billion to $3.5 billion. In the precious metals sector, gold futures declined by 1.3% to $2,680.22 per ounce, while silver futures fell by 3.2% to $30.32 per ounce.
This fluctuation reflects ongoing investor sentiment toward inflation and subsequent market reactions to economic indicators..