S&P 500, Nasdaq fall as buyers dial again bets on Fed price cuts in 2025

By Johann M Cherian and Sukriti Gupta

(Reuters) -U.S. shares declined on Monday, with the S&P 500 hitting a two-month low as bond yields surged following robust payroll information final week, reinforcing bets that the Federal Reserve will keep a hawkish stance by way of a lot of the yr.

At 11:39 a.m. ET, the Dow Jones Industrial Common rose 93.86 factors, or 0.22%, to 42,032.31, the S&P 500 misplaced 36.53 factors, or 0.63%, to five,790.51, and the Nasdaq Composite misplaced 254.71 factors, or 1.33%, to 18,906.92.

Wall Road’s concern gauge rose 1 level, touching a greater than three-week excessive.

The domestically delicate Russell 2000 index declined 0.9% to its lowest degree since September 2024, extending Friday’s decline, which noticed it enter correction territory after falling greater than 10% from its November intraday report excessive.

Pressuring shares, yields on longer-dated Treasury bonds are pinned at multi-month highs. [US/]

At one level, merchants have been now not totally pricing in even one Fed price minimize this yr, based on information compiled by LSEG, from about 43 foundation factors earlier than Friday’s job figures. Bets at present replicate expectations of a 25.6 bps easing by the Fed’s December assembly.

“Within the early phases of recalibrating financial coverage, buyers are inclined to take a little bit of a risk-off angle,” mentioned Artwork Hogan, chief market strategist at B Riley Wealth.

“However the vital a part of what has modified to this point this yr is that financial information being optimistic on the finish of the day will probably be a internet optimistic for company earnings and for markets.”

5 of the 11 S&P 500 sectors declined, led by a 2% drop in Utilities. Megacaps have been down, with Tesla (NASDAQ:TSLA) sliding 1.5%, Apple (NASDAQ:AAPL) dropping 2.4% and Alphabet (NASDAQ:GOOGL) shedding 1.6%, sending the Nasdaq to a greater than one-month low.

On the flip aspect, Power rose 2.2%, monitoring larger crude costs. The S&P 500 equal-weighted index was up 0.1%.

The principle indexes logged their second consecutive week of declines within the earlier session after a number of studies pointed to better-than-expected financial exercise, elevating worries that inflation may very well be operating excessive.

Buyers additionally priced within the chance that the incoming Donald Trump administration’s insurance policies – similar to tariffs and a clampdown on unlawful immigration – might threaten world commerce and gasoline worth pressures when the Fed has additionally signaled a cloudy financial coverage outlook. Trump is predicted to take workplace on Jan. 20.

The Shopper Worth Index numbers and the central financial institution’s Beige E-book on financial exercise, each due on Wednesday, will probably assist buyers gauge the Fed’s coverage outlook.

Some chip shares fell, with Nvidia (NASDAQ:NVDA) dropping 2.9% and Superior Micro Gadgets (NASDAQ:AMD) slipping 0.5% after the U.S. authorities mentioned it might additional limit artificial-intelligence chip and expertise exports.

Moderna (NASDAQ:MRNA) slid 21.8% to the underside of the S&P 500 after slashing its 2025 gross sales forecast by $1 billion.

Dow element UnitedHealth Group (NYSE:UNH) added 4.3%, CVS Well being (NYSE:CVS) rose 5.6% and Humana (NYSE:HUM) climbed 7.4% after the Biden administration proposed 2026 reimbursement charges for Medicare Benefit plans run by personal insurers, which might end in a 2.2% enhance in funds.

Declining points outnumbered advancers by a 1.74-to-1 ratio on the NYSE, and by a 2.22-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and 23 new lows, whereas the Nasdaq Composite recorded 19 new highs and 209 new lows.