Wall Street’s main indexes declined on Thursday in light trading as rising Treasury yields continued to exert pressure on equities. The 10-year Treasury yield rose to 4.64%, the highest since May, negatively impacting rate-sensitive sectors like real estate, which dropped 0.4%, and consumer discretionary, which fell 0.5%.
Among megacap stocks, Amazon slipped 0.3%, and Meta Platforms declined 0.6%, as broader markets struggled to maintain the positive momentum from earlier in the week. By mid-morning, the Dow Jones Industrial Average had fallen 123.50 points to 43,173.53, the S&P 500 was down 15.13 points to 6,024.91, and the Nasdaq Composite had dropped 46.45 points to 19,984.67.
The market’s downturn is being driven by expectations of limited interest rate cuts by the Federal Reserve in 2025 and stretched valuations in major stocks. This year, megacap stocks like Apple, Tesla, and Microsoft have been instrumental in the S&P 500’s 28.4% total return. However, excluding these top performers, the index’s return would have been 13.2%.
Investors remain hopeful for a “Santa Claus rally,” a historical trend of stock gains during the last few trading days of December and the first two days of January. Historical data shows that the absence of such a rally often correlates with weaker performance in the following year.
Labor market data showed resilience, with initial jobless claims falling to 219,000, below the 224,000 forecasted. However, cryptocurrency-related stocks declined as Bitcoin fell by 3%. Coinbase, Riot Platforms, and Mara Holdings each lost more than 1%.
Overall, declining stocks outnumbered advancing ones on both the NYSE and Nasdaq. Despite current challenges, investors remain optimistic about a strong year-end performance, driven by the impact of artificial intelligence and a favorable interest rate environment.
