U.S. stocks closed mixed on Monday. The Dow Jones Industrial Average gained 358 points, or 0.9%. The S&P 500 index clawed back losses to close up 0.16%.
However, the tech-heavy Nasdaq ended down 0.38%. Investors sold tech stocks amid expectations for fewer rate cuts this year. Bank of America economists now predict a rate hike as the more likely next move.
They said in a note, “Inflation is above target, and the Fed was primarily cutting to ensure a strong labor market, which has been met. This means no further cuts are needed.”
The benchmark 10-year yield hit its highest level since late 2023 at 4.79%. Higher interest rates can slow economic growth and make borrowing more expensive for tech companies that rely on it to fuel growth.
Rate hike concerns impact stocks
Chip stocks also weighed on the Nasdaq after the Biden administration proposed restrictions on exporting certain advanced AI chips to protect national security. Companies decried the plan, stating it “threatens to derail innovation and economic growth worldwide.” Nvidia shares ended down 1.97%.
Other notable stock movements included:
– Trump Media jumped 21.5% ahead of Donald Trump’s inauguration. – Moderna cut its 2025 sales forecast, leading shares to close down nearly 17%. – Howard Hughes Holdings jumped 9.5% after Bill Ackman’s Pershing Square proposed merging with the real estate company.
– Quantum computing stocks like D-Wave Quantum and Rigetti Computing plummeted over 30% after Meta CEO Mark Zuckerberg expressed skepticism about the practicality of quantum computing. Bitcoin fell almost 1% as investors lost appetite for risky assets amid the market rout. Cryptocurrency-related stocks like Coinbase and Riot Platforms also declined.
This week, investors will get a firsthand look at how companies are holding up against higher rates as six major U.S. banks report earnings starting Wednesday. Bank CEOs can provide insight into loan demand, credit card usage, and the corporate environment.
