Market Monitor January 8th

Highlights

The US stock markets experienced losses due to rising long-term interest rates, which heavily impacted technology stocks because of their sensitivity to rate increases.

The US 10-year Treasury yield climbed to 4.69%, its highest level since April, driven by stronger-than-expected economic data from the services sector.

This fueled concerns about prolonged inflation and dampened expectations for Fed rate cuts in 2025.

Tech giants such as Microsoft, Apple, Meta, and Amazon lost between 1% and 2.5%. Nvidia dropped more than 6% after reaching an intraday record. Tesla fell 4% after Bank of America downgraded its rating to "hold," despite raising its price target due to optimism about its robotaxi and autonomous driving software.

However, analysts emphasized that much of Tesla's future potential is already reflected in its current price, which poses certain risks.

Major Index Performance:

SPY (S&P 500)

Down 1.1%, showing weakness over the past month (-3.16%) but maintaining a positive 12-month trend (+23.49%).

QQQ (Nasdaq 100)

Dropped 1.8%, impacted by broader tech stock declines. Still up 25.79% over the past year.

IWM (Russell 2000)

Declined 0.8%, with a notable 6.78% loss in the last month but up 15.26% over 12 months.

Sector Performance:

Over the past week, Health Care and Energy led with gains, while Real Estate and Consumer Staples struggled.

On a 1-month basis, Information Technology and Energy sectors showed strength, whereas Real Estate and Financials underperformed significantly.

All info available on our Sector Performance page

Breadth Numbers:

Short-term Weakness:

On January 7th, only 28.4% of stocks advanced, while 69.2% declined, indicating bearish sentiment for the day.

Just 38.7% of stocks are trading above their 50-day SMA, reflecting short-term market weakness.

Mixed Long-term Strength:

46.5% of stocks remain above their 200-day SMA, which suggests that nearly half of the market is maintaining a long-term uptrend. This indicates that while short-term conditions are bearish, the broader market still has a reasonable foundation.

Low Momentum in Strong Moves:

Only 2.9% of stocks gained more than 4%, and 3.4% declined more than 4%, showing a lack of strong momentum on either side. This suggests a relatively cautious market environment with limited significant price movements.

Cautious Sentiment:

Breadth readings over multiple days show declining participation in rallies, with fewer stocks sustaining strength above key moving averages (e.g., SMA 50, 100, 200). This can indicate increased risk aversion among investors.

All info available on our Market Monitor page

Summary:

The day marked declines across major indices, with rising long-term interest rates potentially weighing on technology and growth stocks. Health Care and Energy sectors provided some resilience, while Real Estate faced headwinds over both short- and long-term time frames.