Tech Stocks Lead Market Decline as Bond Yields and Dollar Surge Ahead of Key Inflation Data

U.S. stocks fell on Monday, led by a sharp decline in tech shares, while bond yields and the dollar climbed as expectations for interest rate cuts faded. Investors are awaiting this week’s crucial consumer inflation report, which could further shape the Federal Reserve’s monetary policy direction.

The S&P 500 dropped 0.4%, while the Nasdaq Composite tumbled nearly 1%. However, the Dow Jones Industrial Average rose 0.5%, buoyed by a stronger performance in non-tech stocks.

Market Fears Intensify
The latest market moves come after a significant sell-off on Friday, which erased all year-to-date gains for Wall Street’s major indexes. The catalyst was a robust December jobs report, signaling continued strength in the economy and raising concerns that the Federal Reserve might maintain higher interest rates for a longer period.

As a result, the 10-year Treasury yield hit a 14-month high of nearly 4.8%, while the dollar surged to its highest level in two years, particularly pressuring the UK pound. Traders now expect no rate cuts until at least September, according to the CME FedWatch tool, with just a modest 30-basis point reduction anticipated for all of 2025.

Inflation Outlook Takes Center Stage
All eyes are on the Consumer Price Index (CPI) report for December, due Wednesday. With inflation still well above the Federal Reserve’s 2% target, there are growing concerns that the central bank may remain on its current path of tightening.

Oil Prices Surge Amid Sanctions
Crude oil prices rose to a five-month high before easing after the U.S. imposed stricter sanctions on Russia’s oil sector, threatening global supply, particularly to key buyers like China and India. Brent crude surged over 2%, surpassing $81 per barrel, while West Texas Intermediate hovered near $79.

Tech Giants Struggle
Shares of major tech companies, including Nvidia, Apple, and Tesla, all suffered losses, as the Magnificent Seven—the top-performing tech stocks—were hit hard by the broader market decline. Notably, Tesla’s stock fell after Europe’s largest pension fund revealed it had sold its entire stake in the company, citing concerns over CEO Elon Musk’s compensation package.

Moderna’s Setback
In corporate news, shares of Moderna plummeted by more than 22% after the biotech company revised its 2025 sales forecast down by $1 billion due to weaker-than-expected demand for vaccines.

As investors brace for a pivotal week, market volatility is expected to persist, with inflation data and central bank moves continuing to be key drivers of sentiment.