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Market Wrap | Tech Slump and Economic Indicators Propel Major Indices Down as Invested Interest Wavers
AInvestTuesday, Jan 7, 2025 5:30 pm ET
1min read
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On January 7 (Eastern Time), major indices of U.S. stocks experienced a downward shift, with the S&P 500 slipping 1.11% to 5909.03 points, the Dow Jones shedding 0.42% to 42528.36 points, and the Nasdaq dropping 1.89% to 19489.68 points. Various factors contributed to this decline, reflecting market concerns over economic indicators.

Key stocks exhibited significant movements, with WiMi Hologram gaining 30.94%, CorMedix rising 29.89%, while Acelyrin tumbled 36.96%, and NeoVolta fell 19.51%. These fluctuations point to investor responses to sector-specific news and broader economic pressures.

The day saw considerable volatility with tech giants bearing the brunt as stock prices for companies like NVIDIA and Tesla plummeted, partially due to profit-taking and analysts' cautious market outlooks. Specifically, NVIDIA saw an over 5% drop after hitting an all-time high, while Tesla sank more than 4% following a downgrade from a leading financial institution.

The downturn was largely prompted by the release of robust U.S. economic data. According to the Institute for Supply Management (ISM), the services sector experienced faster-than-expected growth in December with an index reading of 54.1, beating the forecast of 53.4. This prompted concerns over potential inflation acceleration, impacting assumptions around Federal Reserve rate policies and applying additional pressure on treasury yields and, consequently, equities including tech shares.

Interpreting these economic indicators remains critical, as they suggest inflation pressures that might complicate monetary policy decisions. Additionally, the rise in the Job Openings and Labor Turnover Survey (JOLTS) to 809.8 million, fueled by the business services sector’s influx, counterbalances the manufacturing sector's continued weakness, depicting an uneven economic landscape.

The sustenance of economic resilience made investors wary about the Federal Reserve's rate plans. With anticipation shifting to June for a potential rate cut, this increased market nervousness provides a telling illustration of the balance investors must keep between inflation and growth forecasts. Understanding market and economic trends to anticipate changes remains essential for investors looking to navigate the complexities of a fluctuating environment.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.